Tuesday, October 25th, 2016 MST

Inflation expectations

The primary reason for owning gold and silver is the expectation of price inflation.  Inflation, of course, comes from money creation at the Fed.

However, as what is now often called the World Financial Crisis showed, gold and silver do well in times of financial crises.  Here, though, let’s look at a very good indicator of future inflation expectations.

Overriding of veto could be good for gold

Congress’ historic overriding of Obama’s veto of the bill that will allow the families of 9/11 victims to sue Saudi Arabia for its alleged role in the terrorist attacks — intentional or inadvertent — has potentially dangerous ramifications for the US but could result in a really positive effect for the price of gold.

Still another debt problem

The official federal government debt now stands just a tad over $19.5 trillion.  Yet few talk about it, and even fewer are concerned. Off-balance sheet liabilities (commitments that have been made but funds not set aside for) are some where north of $100 trillion dollars.  Rarely talked about.

Driving the markets

Central bank actions and expectations of central bank actions are driving investment markets: the bond markets, the equity markets and the metals markets.  Economic news does not move the markets, except that markets move on how investors think that central banks will react to economic news.

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