Precious metals expert Michael Ballanger reflects on the outlook for gold and silver markets as Donald Trump ascends to the presidency.
There once was President Trump
Who hated it when stocks would “dump.”
He promised largesse
To fix this fine mess
By launching a big fiscal pump.
With global markets raging higher since the election victory for Donald J. Trump, Wall Street has suddenly embraced the president-elect as the new messiah for returning global growth and propelling risky assets to all-time highs.
In the wee hours, after the election results were finalized, central bank trading desks around the world kicked into action, buying S&P futures and selling bonds, foreign currencies and gold and silver in order to keep the dream alive and avoid a North American “Brexit-style” crash in markets.
Forget Janet Yellen and the Fed; The Donald is now the new poster child for jawboning markets to new heights. He is the new Greenspan, complete with obfuscatory language, vagary of thought, and brashness of assertions. The markets love their new messiah, as the Dow has hit a record high led by guess who? Why the banks, of course, because higher interest costs for consumers is a bullish development for bank profits, and with the 10-year Treasury yield back above 2%, it represents a massive increase in borrowing costs.
However, this market is being driven by excess liquidity sloshing around in the system and as I have written about for years, one can “never underestimate the replacement power of equities within an inflationary environment.” And DJT is all about spending and growth and walls and infrastructure build-out, all of which is inflationary (see chart above).
Global markets are advancing under the newly established meme that the next era in portfolio strategy is no longer central bank leadership but fiscal leadership. The Wall Street elite are now …read more