• Proactive: Rising Inflation Funnels Wealth Away From the Middle Class
• Reuters: Should You Take Reddit’s Silver Trade Seriously?
• Yahoo!Finance: Gold Is Reaching Up Towards $2,000

Image: Proactive

Proactive: Rising Inflation Funnels Wealth Away From the Middle Class

The current inflationary spiral has been explained by Modern Monetary Theory as just a blip that will pass once the last of the coronavirus restrictions are lifted. Yet the Financial Times calls it ‘the largest inflation shock since the 1970s’. But according to Alastair Ford, the pragmatists’ problem is that the spiral didn’t begin with the coronavirus crisis, but had begun at least since the financial crisis of 2008. And even this is only the beginning.

The inflation of asset prices and commodities has been with us since the early parts of the new millenium, in part driven by the huge new demand hub in China. However, this has largely gone unnoticed by the people due to politicians’ and the central banks’ engineering. Now the pandemic has shown the decline in the middle class’ purchasing power – and people are starting to notice.

This is bad news for the European and North American middle class: inflation is tackled by raising interest rates, and the middle class is reliant on low interest to fund ownership otherwise out of their reach. We are in the middle of a multi-generational shift in wealth from the middle classes towards the super wealthy, the welfare state and the emergent capitalist classes in China and the Far East.

Read the whole article /  8.7.2021, Alastair Ford

Reuters: Should You Take Reddit’s Silver Trade Seriously?

The social media platform Reddit is a home for thousands of small time silver investors, who call themselves “silverbacks” or “apes” and try to corner the market and topple “an unjust banking system”. One of them is the 56-year old Kerry Kraker, who invests $100 – half his spare cash – into silver coins every week. This Reddit community called Wall Street Silver was formed in January inspired by the WallStreetBets-inspired uprising of ordinary people against the financial elite.

Silver is worth around $26/oz, but these stackers believe it will inevitably rise as inflation undermines currencies and supplies run short. They believe that with coordinated buying they can raise the price by 100% or even 1,000% and get one over the “bullion banks” who they believe are controlling the trade of precious metals.

The community argues that banks trade paper contracts for silver they don’t actually have, which is keeping the prices lower than they actually are. In some ways they are correct, yet according to market professionals they are unlikely to succeed. While much of the traded silver is technically on loan, the reason is that silver speculators don’t actually want to own the physical silver. While there might be some supply problems if everyone suddenly wanted to claim their silver at the same time, silver’s whole supply is plentiful and central banks expect inflation to remain in low single-digits. 

Only about a quarter of silver’s yearly supply of 1 billion ounces is used to manufacture bars and coins. Michael Mesaric of the gold and silver refiner Valcambi SA says that Reddit might engineer a squeeze on products, but they cannot touch silver in total. 

Read the whole article /  14.7.2021, Peter Hobson

Yahoo!Finance: Gold Is Reaching Up Towards $2,000

The floundering gold trade has finally caught a ray of sunshine when Goldman Sachs analyst Mikhail Sprogis reiterated his $2,000 ounce price target in a new research note. He says that gold is back in a Goldilocks scenario of moderate inflation and continued global recovery. This means it’s trading at a discount compared to the current real rate.

Sprogis estimates that gold price is consistent with a real rate of 0.1%, while it’s currently priced at -0.87% by the market. He predicts that nothing interrupts the current global recovery and that inflation will remain subdued, which would preserve this discount and give a modest upside to gold. His price target assumes that gold price will increase 11% from the current level.

Gold price has improved by 2%, but it still remains 11% lower than the record high of over $2,036/oz in July 2020. Sprogis says that gold has strongly correlated with the ‘inflation fear factor’, which meant that prices corrected sharply after hawkish Fed activities.

Read the whole article /  7.7.2021, Brian Sozzi