by David Kranzler
Investment Research Dynamics
To paraphrase JP Morgan’s (the man) 1912 testimony to Congress: “Gold is money, everything else is credit.” – JP Morgan, 1912
The question you’ll need to answer for yourself is “what alternatives are there for big investments right now?” The stock market, residential real estate market and bond markets have been inflated into bubbles of historic proportions. The Fed has created a financial market Frankenstein of Biblical proportions.
Commodity inflation is raging now, and eventually this will transmit into soaring food, energy and capital/consumer goods price inflation. This dynamic is just getting started. It will soon get worse, as the Treasury earlier this month released its plan to flood the financial system with cash by reducing its balance on its general account at the Fed by $1.229 trillion. This was money printed by the Fed and transferred to the Treasury via “QE.” Yesterday, Fed Chairman Powell reiterated the Fed’s commitment to continue printing money for the foreseeable future.