Sunday , 21 July 2024

Continuing High Unemployment = More Money Printing = Higher Gold & Silver Prices

We believe the Bernanke and the Federal Reserve are more focused on reducing unemployment given the greater near-term social consequences of unemployment, particularly long-term unemployment as defined by U-6 and youth unemployment.
The U-6 unemployment rate is 16.2% and the youth unemployment is 18.1%.

The chart below from the Bureau of Labor statistics shows that despite the easy monetary policy and the fiscal stimulus packages, there is an incremental 2 million people unemployed.

(Click charts to expand)

Between 2008 and 2011, the Federal Reserve has significantly expanded its balance sheet depicted by the monetary base (red line below) despite generating only a modest increase in real GDP (green line below).

Tactical Strategy

The physical markets for both gold and silver should determine the long-term price of the metal and we believe individual investors should continue to accumulate physical precious metals to diversify their wealth and help mitigate the loss of purchasing power from central bank intervention.


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