Posted April 18, 2022
By Matt Insley
Let’s Get Physical
“When will this end?” a reader remarks on our “Bidenflation” issue last week.
“If the wheels don't come completely off and sink us into a depression first, the answer is about four to five years from now… At age 71, I’ve lived through it.
“It took Reagan several years to fix Carter’s debacle, and if you believe Shadow Stats, this time is already as bad as 1981.
“Once again, the Fed is behind the curve, and let’s not forget that pesky national debt of $30 trillion (which we didn't have in the 1970s).
“Buckle up folks, and invest in hard physical assets. If you can't touch it, it doesn't exist.”
For our latest update on the G.O.A.T. hard asset, we turn today to our macro expert Jim Rickards…
Send your opinions to, TheRundownFeedback@StPaulResearch.com
Your Rundown for Monday, April 18, 2022...
Gold’s “Perfect Recipe”
“Gold [has] held the line at $1,900 per ounce and has not closed below that level since February 25,” Jim says.
“Apart from the positive price action, gold investors can rest assured because of the reasons for the higher price and higher trading range…
- “The first and most obvious reason is the War in Ukraine,” he says. “The war has badly disrupted global supply chains in ways that will not be fixed for years. This creates higher prices for basic commodities, energy, strategic metals, agricultural goods and all manufactured goods that require those commodities as inputs.
- “The second reason to own gold is the unprecedented economic war between the U.S. and Russia that’s raging side-by-side with the shooting war in Ukraine,” says Jim. “It was not expected that the U.S. would seize and freeze the reserve assets held by the Central Bank of Russia. Now every central bank in the world is reevaluating its dollar-denominated reserves [and] acting preemptively to reduce dollar holdings.”
- The third reason for higher gold prices is obvious: inflation. “By itself, inflation does not necessarily drive gold prices higher. What it takes is a condition where inflation is running ahead of interest rates,” Jim says. “That’s the environment we’re in right now… with a real rate of interest at negative8%. Gold – with zero yield – is highly attractive compared to notes with a negative real return.
“The question for investors is whether these three conditions – war, lost dollar confidence and inflation – will continue,” Jim notes. “Unfortunately, the answer is yes.
“What this means is that the gold rally has far to run,” he says. “The initial gains are rewarding for patient investors, but they are just the beginning.”
In terms of global economic conditions? “It’s the perfect recipe for higher gold prices.”
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Market Rundown for Monday, Apr. 18, 2022
S&P 500 futures are down 15 points to 4,370.
Oil is up 0.25% to $107.22 for a barrel of West Texas crude.
Meanwhile, gold is up $22.40 per ounce, slightly under $2,000.
And Bitcoin is down 2.5%, a shade below $40,000.
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We hope your week’s off to a strong start. We’ll catch you Wednesday…
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