Saturday, September 25, 2021

$1 Trillion Coins Instead of More Federal Debt?!

by Stefan Gleason, Money Metals:

Credit risk out of China and debt ceiling drama in Washington are driving precious metals markets this week. Gold and silver attracted some significant safe-haven buying as equity markets succumbed to selling.

The storyline being trumpeted in the financial media is that a government shutdown and possible debt default loom in October unless the U.S. Senate comes to an agreement on raising the debt ceiling.

Mock $1-Trillion coin/IMAGE: DonkeyHotey (CC)

There is some truth to these headlines. And we would certainly include unsustainable government debt among the top reasons for investors to own physical precious metals.

10-Year Yield Jumps to 1.43% as Bond Market Reacts to what the Fed Said Yesterday about Tapering, Rate Hikes, and Inflation

by Wolf Richter, Wolf Street:

The Fed is getting nervous about inflation. “Temporary” doesn’t cut it anymore. And the bond market is getting a whiff of it.

The 10-year Treasury yield jumped 11 basis points today to 1.43% at the moment, the highest since early July, and the biggest jump since February. Apparently, it sank in today what the Fed had said yesterday afternoon. It placed the beginning of the Big Taper into November to be done with by mid-2022, which would then pave the way for rate hikes. Fed officials keep moving the first rate hike closer and closer. And they expressed their nervousness about the red-hot “temporary” inflation lasting a disturbingly long time.

“Hyperinflation” Tops List Of Fears For UBS Clients

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from ZeroHedge:

With Democrats in Washington pushing for a $3.5 trillion ‘social infrastructure’ stimulus package and Speaker Pelosi perhaps hinting at the removal of the debt ceiling altogether for the US, it is perhaps no surprise that some are ‘worried’ that the idea of consequences is absent from any discussions.

Pelosi called the debt ceiling vote a “tradition,” adding that there is some back and forth about whether they need to do it, before she dropped this bombshell: “There’s some doubt as to whether that should be the case.”

Well no debt ceiling would certainly enable MMT – as long as The Fed can keep monetizing that malarkey – and perhaps that’s why USA sovereign risk is spiking…

Peter Schiff: Gold Will Explode; The Dollar Will Implode When the Markets Figure This Out

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by Peter Schiff, Schiff Gold:

Peter Schiff says gold will explode and the dollar will implode when the markets figure out the Fed is crying wolf when it comes to monetary tightening.

The Federal Reserve wrapped up another meeting without making any changes to its current extraordinary, loose, inflationary monetary policy. But the central bank did hint that it may start tapering its quantitative easing program “soon.”

That was enough for the markets. They continue to expect the Fed will tighten monetary policy and fight surging inflation. Gold sold off after the FOMC statement came out, dropping about $10.

Silver-Gold Ratio Opening Up Again

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by Peter Schiff, Schiff Gold:

The silver-gold ratio has ballooned again, indicating that silver is once again a bargain buy.

During a gold bull market, silver typically outperforms gold. We saw this during the big runup in the price of both metals through the early months of the pandemic. In the third quarter of last year, silver charted its best quarter since 2010, finishing up 27.62% through the three months ending Sept. 30. Going back further, silver spiked 106.6% off its March 2020 low.

Cash Will Be King When the SHTF (Unless It’s Totally Mad Max)

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by Fabian Ommar, The Organic Prepper:

Unless some extinction-level event takes the entire planet back into the Stone Age, cold hard cash will still be used.  Cash will be king when the SHTF unless it’s a full-on Mad Max scenario like the one Selco survived.

I get asked frequently about the role of cash during disasters and emergencies. It seems many starting in preparedness think we’ll jump from the pot directly into the fire if the SHTF, with greenbacks becoming a useless relic. 

In reality, SHTF is a slow slide into hell, the proverbial frog in the boiling pot nine out of ten times. It’s exactly what’s happening with COVID-19 and almost everything coming from it

An Ode to Meat Loaf

by Craig Hemke, Sprott Money:

As the FOMC meets over the next two days, the markets look to Fed Chairman Powell and ask: “What’s it gonna be boy? Yes or no?” And whichever answer Powell provides on Wednesday via his fedlines and press conference will likely determine where precious metal prices head as we move toward month- and quarter-end.

So, what will it be? Yes to taper, or another kick of the can? As I type on Tuesday morning, it’s almost impossible to guess the outcome, simply because the Fed has given so many conflicting answers and clues over the past few weeks.

First, we must consider the overall feasibility of tapering the Fed’s involvement in supporting the bond market. If the Fed’s $80B/month in debt monetization is removed from the bond market, from where will buyers emerge to replace them? If no buyers emerge, then how far will rates have to rise in order to attract the buyers necessary to keep treasury auctions from failing? Would the yield in the 10-year note have to rise to 3%? Maybe 4%. Maybe even higher? The U.S. simply cannot afford these levels of nominal rates, so the notion that the Fed can withdraw from the bond market at this point seems silly on its face.