Phil Carr
The Gold & Silver Club
It is said that those who do not learn from history are bound to repeat it. Unfortunately, it would seem that this adage is all too applicable to today’s Federal Reserve.
Historically, the Federal Reserve has never been right on monetary policy and has a proven track record of getting it 'wrong' on inflation, time and time again!
Throughout the whole of 2021, the Federal Reserve played down the biggest year-on-year rise in inflation seen in more than four decades – characterizing the record spike as “transitory”.
And that wasn't the first time.
Before that, it was the 1970s and early 1980s, when the Fed slowed down the pace of rate hikes too fast – only to see inflation surge once again. Had the Fed learned from the painful inflationary experience of the past, they would know that there are almost always “three waves of Inflation”.
We all make mistakes, but the Federal Reserve may be making a bigger one than most by prematurely declaring victory on inflation too soon.
This ultimately means that the Fed has removed all obstacles and cleared the path for Commodity prices to take off – presenting traders with “one of the greatest wealth creation opportunities the world has ever seen”.
Since the beginning of this year, a long list of leading Wall Street banks from Goldman Sachs, JPMorgan to Bank of America have been predicting that Commodities prices will hit new record highs in 2023. In recent days, that chorus has once again become louder with a growing list of financial institutions, advising clients to pile back into commodities now – ready for the next big leg higher!
Whichever way you look at it, one thing is clear. Jerome Powell and his colleagues at the Fed has given a green light to the Commodities Supercycle. That’s welcoming news for the bulls, but painful for bears and anyone sitting on the sidelines, who must now decide how much FOMO they can handle.
Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:
Trading has large potential rewards, but also large potential risk and may not be suitable for all investors. The value of your investments and income may go down as well as up. You should not speculate with capital that you cannot afford to lose. Ensure you fully understand the risks and seek independent advice if necessary.
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Editors’ Picks
EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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