Biden’s Inflation Plan ‘not tinkering around edges’

Both gold and silver surged last night with gold up $45 (2%) and silver up 86c (2.7%).  Ostensibly this was driven on inflation trades on the back of Biden introducing his $2.25 trillion “American Jobs Plan,” infrastructure stimulus package.  However it can’t be ignored that we have now passed the March delivery on COMEX futures when it is ‘convenient’ for those massive bullion bank short positions to have a nice low price….cough, cough

Biden’s plan will see $2.25 trillion more deficit spending (on top of the $28 trillion national debt currently standing BEFORE counting unfunded liabilities and BEFORE the $1.9 trillion stimulus package last month) and the introduction of higher taxes for businesses (up to 28%) and a minimum ‘levy’ of 21% on global corporate earnings.  Whether he can get the latter tax packages through Congress doubtful and hence it could all go straight to the deficit.

Unabashedly saying it is “not a plan that tinkers around the edges.”, he stressed this was a plan to get money to the broader population, not just the rich benefactors of QE, stating “It’s time to build our economy from the middle out,” and that it “rewards work, not just wealth.”

Them’s magical words for inflation!

There is a little bit of irony in that inflation is really a tax on savers, wage earners, and those without sound money or hard assets…

Gold and to a lesser extent silver have been on a constant decline since August last year.  Gold just had one of its worst quarters ever.  However if you compare the actual outflows of gold and silver from ETF’s, they pale compared to the smart money that went in last year and previous years that saw this coming.  Momentum traders have left for sure, but that’s what they do. ‘Oooh look – shiny thing!...’ Moreover if you look at the amount of physical metal being taken (not sold) from both you again get an insight into the smart money taking cover.

Smart money sees 25% of all the US dollars EVER printed, printed last year.  They see the last and this “American Jobs Plan” stimulus measures as the desperate throws of the die that they are.  They see a Fed balance sheet with $7.7 trillion bonds paid for with freshly printed USD.  They see US national debt of $28 trillion before counting committed unfunded liabilities of $162 trillion. If they are outside the US they know this is a similar situation around the world and regardless, if the US sneezes, the world catches the cold.  As we reported Monday they have the warning in their ears from US Treasury Secretary when the USD became Fiat “The dollar is our currency, but it’s your problem”…

The choice before investors now is hold cash getting eroded by inflation, buy shares at near all time highs on the hope this doesn’t matter or the hope they can keep this Ponzi scheme going, or buy gold and silver at low prices before ‘the rest’ cotton on.  Property is another hard asset that should benefit from inflation but current prices pumped by government stimulus and ultra lows rates don’t seem sustainable.  i.e. whilst precious metals are plumbing lows, property is in bubble like highs.