Gold dallies, silver rallies to start final trading week of the year

(USAGOLD – 12-28-2020) – Gold dallied while silver rallied to start the final trading week of the year. The yellow metal is up $6 at $1888 (+0.3%). Silver, which a good many investors believe will be a direct beneficiary of the Biden administration’s emphasis on a green economy, is up 73¢ at $26.63 (+2.8%). While the emphasis has been on the now-signed, sealed, and delivered pandemic relief package, the Federal Reserve has gone about the business of deploying QE4 – a policy many see as having done the lion’s share of work pulling the economy and markets from disaster’s edge. Analysts and economists, in turn, have begun to speculate on the repercussions of those policies with many concluding that stagflation will be the likely outcome.

“Over the coming years,” says Strategic Investor’s David Forest in an analysis posted at the Daily Reckoning website, “we expect the dollars needed to produce a sufficient income will keep growing. That doesn’t mean we’ll see massive inflation like some analysts are predicting. We could see something more like stagflation. That’s when growth stalls while prices rise. This is the deadliest combination possible. It’s also more of a reason to own gold. Over the past 25 years, gold appreciated more than 380%. That’s what helps protect your wealth when you can’t even earn a decent rate of interest on your savings. At the end of the day, there may be surges along the way, but the dollar is heading lower.”

Chart of the Day

overlay chart of gold and the misery index, 1970s

USAGOLD note: In the contemporary global fiat money system, when the economy goes into a major tailspin, both the unemployment and inflation rates tend to move higher in tandem. The word “stagflation” is a combination of the words “stagnation” and “inflation.” President Ronald Reagan famously added unemployment and inflation together in describing the economy of the 1970s and called it the Misery Index. As the Misery Index moved higher throughout the decade so did the price of gold, as shown in the chart shown above.

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