Investors have been slower than a tank of turtles swimming in molasses when it comes to grasping reality, but they may be getting the message on inflation and the Fed’s fight ahead at last.
Gold bugs started 2023 with high hopes after the precious metals sector showed impressive relative strength versus paper assets in 2022.
So far, no good.
While gold’s recent pullback started violently, mid-upleg selloffs are perfectly normal. They are essential periodically to rebalance sentiment which keeps uplegs healthy, extending their gains. Spec gold-futures buying will return soon..
There are more red flags and crucial issues that are being overlooked by the Fed, such as the credit quality of the mortgage portfolios and borrowers’ profiles, shares of non-core assets, and off-balance sheet items.
The trend across the nation is to eliminate taxes on precious metals. The state of Louisiana and Ohio both experimented briefly with reimposing sales taxes on precious metals purchases. They both quickly reversed course..
The inflationary acts were committed in 2020 and 2021. The inflation was inflicted then and is now history. What is happening now is a plethora of knock-on effects from the inflation.
