The central bank quandary: Inflation vs recovery

Blain’s Morning Porridge/Bill Blain/11-23-2021

Ed Stein cartoon showing a chart of stock and gold diverging with an investor thinking 'decisions-decisions'

“The problem is by messing around with interest rates, you unbalance the whole financial asset structure. Bonds yield too little, and Equities are overpriced. As I said above, that will continue till interest rates start to normalise, forcing the relative value of equity lower. Which means, have fun in the equity markets today… but we don’t know for how long. There is an alternative. Avoid financial assets. Think about real assets… Gold, Property, etc… Buy assets linked to the real world.”

USAGOLD note: Blain comes to this conclusion after a long excursion into the why’s and wherefore’s on stocks and bonds – all by way of answer to a reader asking about how the bond market works and what she should be doing with her savings.

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