by Turd Ferguson, TF Metals Report:
Yesterday was a lousy, bitter and angry day. That’s no way to live. Especially not in times like these where so many events are conspiring to make you feel lousy, bitter and angry. Fortunately, today is a new day and it’s time to adjust the mojo.
If you’re wondering….Yes, of course, we will still watch the day-to-day and tick-for-tick as we monitor for the eventual turn and bottom that will lead the next leg higher. There’s a lot of fiat to be made in the next rush up. In the meantime, however, angst and frustration will only serve to distract from the core mission that this site has pursued for nearly ten years now.
With the timeline of The End of The Great Keynesian Experiment having been sped up by Covid, a few hours away last evening allowed me to refresh my perspective. I keep reminding you of September-November 2019 and how it was a simple consolidation before this year’s blast forward to new ATHs. THAT’S ALL THIS CURRENT PERIOD IS, AS WELL.
To that end, we should be rejoicing in this current spate of price weakness. Prices and premiums have come down and this has provided a much need opportunity to acquire more metal (and mining shares, too). Recall the rush back in August and how difficult it was to reasonably source metal in May. The analogy is that you grow your crops and fill your barn during summer as you prepare for the long winter ahead…and that winter is most certainly coming. Nothing about that has changed.
Regarding the transient nature of this current decline and the reasons why it will soon reverse as we begin to focus upon 2021:
- Covid Crisis continues and there is no “V-shaped” recovery. Instead, malaise and stagflation will be the topics in 2021.
- To combat this, the post-election “leadership” in the US will run the fiscal 2021 deficit above the $3.15TRILLION of fiscal 2020.
- The Fed will gleefully monetize nearly all of this new treasury issuance.
- The Fed will move toward a policy of overt Yield Curve Control as a way of institutionalizing the negative real rates they desperately need to manage the debt.
- All central banks will begin to consider negative nominal rates as a policy tool.
- For these central bankers, a RISING gold price is now preferable to a falling gold price.
- Physical demand will continue to increase and COMEX will be increasingly strapped for physical metal to deliver.
One of the great economic paradoxes of our time is that the policymakers behind our currency system were so successful in getting gold out of the system for so long that the system will now crash unless gold goes UP because most sovereigns will likely default under + real rates. pic.twitter.com/dUW0YDNoYR
— Luke Gromen (@LukeGromen) October 7, 2020
Thus, again, we should be relishing this current price weakness and using it to our advantage. It’s akin to favorable autumn weather as we “fill our barns” ahead of the winter….as the winter is still most definitely coming.
For today, we will await the FOMC minutes at 2:00 pm ET to see if there’s anything unexpected. Additionally, more tweets and headlines of possible “stimulus” could help to drag price back to near UNCH on the week. For now, though, we’re just slogging away and dealing with the reality of the outrageous smash we received late yesterday.