Who the Hell is Thomas Barkin
I was doing just fine in life without ever hearing who Thomas Barkin is, but no… he had to make sure the whole world knows he’s the president of the Richmond branch of the Federal Reserve.
68-year-old Barkin did what’s referred to as a FedTalk (similar to a TedTalk) where he acted as a mouthpiece for the FED in order to telegraph a key message to the markets.
What is that message, you’re wondering?
Barkin said that he’s still not convinced that inflation is trending down on autopilot and that the red-hot labor market has slowed. It’s only to a level he calls “hot.”
He said there’s no barrier to interest rate hikes in the inflation against inflation, which was enough to kill the joy for gold.
The bulls were already counting the minutes until the official pause and pivot back down, but I think they will have to wait at least four months longer if not more.
If I were in charge of decorating the FED offices, I would probably enshrine every doorstep with a message that their biggest mistake in the 1970s was loosening and cutting too early.
It’s like in those movies where the good guy spares the life of the young villain and the decision comes back to haunt them later on.
Especially after this very upbeat earnings season, gold is coming to terms with the “higher for longer” regime and the prospect that even if a few more banks here and there have played chicken with the FED and have a balance sheet mismatch that could lead to a run on their bank, the FED will not succumb to those pressures (yet).
For the FED to cut interest rates, it will have to be so thoroughly convinced that it is the only thing that could stop a catastrophe from happening, and we’re just not there in terms of stresses on the system.
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As you can see, most respondents now believe we will not see any cuts this year. Just a few weeks ago, this number was lower, and Q3 of this year was still debated.
Many don’t think that gold has been rallying because of the debt ceiling situation. They think it’s solely due to de-dollarization, but I really want to stress that this is untrue.
Gold is most people’s favorite go-to asset in case of a debt default:
What does one do in times like these when gold is testing its 50-DMA support and it looks like America’s politicians will raise the debt ceiling while they debate the way the country is overspending and mortgaging its children?
Here’s the simple answer: if one does not own nearly enough precious metals as they wish to have, use the weakness to accumulate more ounces.
If one is trading gold equities, tighten stop-losses.
If one has no exposure to gold equities, build a watch list and wait.
Your time will come, but now’s no season for aggressiveness.
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Governments Have Amassed ungodly Debt Piles and Have Promised Retirees Unreasonable Amounts of Entitlements, Not In Line with Income Tax Collections. The House of Cards Is Set To Be Worse than 2008! Rising Interest Rates Can Topple The Fiat Monetary Structure, Leaving Investors with Less Than Half of Their Equity Intact!
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