U.S. fiscal and monetary policy is being run by fools that seem oblivious to the dangers of hyper-inflation. I would suggest that the physical gold and silver buyers that want lower prices so that they can add more to their collections will soon be disappointed. Inflation is coming, and with it, even the price of gold and silver should rocket upward.
Jerome Powell and the Fed are actively working to increase inflation. The Fed's monthly purchases of $120 billion of bonds during a time when the price of everything is going up, the US govt. is disbursing helicopter money, and vaccinations may release a tidal wave of consumer spending, is almost certain to get the job done. However, Powell claims that the upcoming inflation will be "transitory". Maybe he is correct, but my guess is that once the inflation genie has been released, it will be impossible to put back in the bottle. And the Fed does not have the tools that Paul Volcker utilized to tame inflation. A taper in bond buying would lead to a stock market crash, and a significant increase in interest rates would lead to the US deficit exploding.
But I judge that Modern Monetary Theory (MMT) is even more insane than unbottling the inflation genie. At least Powell has a chance or being correct that an increase in inflation to greater than 2% per year may be transitory. Stephanie Kelton's theory that the Federal defict doesn't matter is truly insane.
My crystal ball on when US inflation will start exploding and what impact it will have on the price of gold and silver is cloudy. But I'm all in and judge that $2,500 gold and triple digit silver is coming in the fairly near future.
On a short term basis, I would not be surprised if the spot price of gold and silver fell even more. The dollar debasement by the US is being matched by other central banks around the world, particulary the EU and Japan. This is allowing a widely followed dollar index, the DXY to rise, and precious metal traders typically sell spot when the DXY is going up. It seems to be a race to the bottom, but only a matter of time before the US pulls ahead in this fiat currency race to the bottom and the dollar resumes its decline.
If the price of gold and silver continues its short term decline, this offers the benefit of allowing precious metal investors to dollar cost average down. Gold and silver investors will come out on top in the medium and long run.
