The Phaserl


Owning Precious Metals is an Insurance against Reckless Monetary Policies of Governments

from Gold And Liberty:

Ever since the US election on November 8, the gold price has plummeted to levels not seen in almost nine months. Notwithstanding recent gold price swings, owning precious metals is a long term insurance against reckless monetary policies of governments.

Contrary to many predictions, the price of gold has taken a real drubbing during the last few weeks mainly on account of the surging US dollar. The expectation that Trump’s election would lead to a longer risk-off period in financial markets was soon overtaken by the perception that he would be able to boost growth and that inflation would be accompanied by rising interest rates, which raised a bearish scenario for gold.

It seems that many market participants are feeling optimistic about Trump’s big proposals such as the tax cuts, infrastructure spending, and abolishing many burdensome regulations.

According to its semi-annual report, the Organization for Economic Cooperation and Development mentioned that US president-elect Donald Trump is expected to offer some fiscal stimulus in the early months of his presidency. And that would probably boost US growth to 2.3% in 2017, up from its previous forecast of 1.9%. And for 2018, US growth could top 3.0%. The OECD also warned that “protectionism and inevitable trade retaliation would offset much of the effects of the fiscal initiatives on domestic and global growth, raise prices, harm living standards, and leave countries in a worsened fiscal position.”

However, Trumps plan will mean huge deficit spending. A Trump presidency will also probably mean the US Federal Reserve is going to be more aggressive with their rate hike campaign. It’s going to be an accelerated campaign.

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