Weekly Briefing 11/22/20 - The Forecast

Weekly Briefing 11/22/20

Weekly Briefing 11/22/20

Inflation is coming in the first half of  2021.  Soybeans are an early indicator of inflationary pressure.

The CRB commodity index put in a violent 4 year low.  Expect the opposite reaction to the upside over the next four years. Every action in the market has an equal, opposite reaction.

The price of paper goods is rocketing in stores and it will not stop anytime soon.

Silver should test its 2011 high by the first half of 2021, $49 per ounce. Nothing moves with inflation more than silver.
Some will blame inflation on weather patterns affecting crops. Others will blame supply shortages from the Covid crisis.  These are both correct, but the main culprit is the amount of money being inject directly into the money supply. Everyone remembers the run in commodity prices from 2008-2011, compliments of the Fed’s easy money policy. However, what is distinctly different this time is the fact the Fed is not directing money into the coffers of the Fed banks with programs like TARP.  Instead, the money is being injected directly into the mainstream economy. This method is both good and bad.  The good side is that people on main street get the help that they need during this economic downturn from forced lockdowns. The bad is that this will cause mass amounts of price inflation across the board. All quantitive easing is not created equally. Our normal inflationary readings if determined in a similar fashion to the 1980’s formula would put inflation at well over 5%-7%. The Fed learned an important lesson from the inflationary run of 1978-1980 when interest rates and mortgage rates to purchase real estate and other assets approached 17%. Those of you who were old enough can remember the lines for gasoline at the pumps in the 70’s. Bottom line, when the general public sniffs out inflation, we witness mass hoarding and panic, magnifying the problem. The easy fix was to change how we calculate inflation by tweaking the formula. This direct QE to main street from March 2020 to March 2022 will most likely equal the same amount ($9 trillion) of QE the Fed pumped into the markets quietly from 2008-2016 through member banks.  Expect to see the largest inflationary run since the Great Depression over the next four years into 2024.  Silver will be the trade of the decade.
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