by Gary Tanashian
The Fed has been trying to promote inflation. That is not the guy with the tin foil hat speaking, it is direct from FOMC statements targeting a higher inflation level, which is another way of saying they are targeting a lower US dollar level. From this we leaned toward that which would benefit from a declining USD. Precious metals (led by silver) are a prime beneficiary, with oil and some commodities remaining firm despite pressure on stock markets as corporate performance and economic signals continue to fade.
Interestingly, the Bank of Japan played a big role in the ‘inflation trade’ last week as Kuroda signaled, temporarily at least, that it was the US’s turn to devalue in the global game of currency Whack-a-Mole in which BoJ was a star figure for so long. In one week, the US Fed rolled over and played dead (again) and the Bank of Japan surprised markets by refusing to intensify its ongoing inflationary operation.