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Fears of Federal Reserve Actions Greater Than Virus Angst

Central bank’s “transitory” inflation narrative has completely collapsed


Don't want to listen? Read the podcast below!

Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.

As Omicron concerns continue to unnerve investors, precious metals markets suffered another setback. Volatile trading in the stock market this week is failing to give a safe-haven boost to gold and silver.

A different set of fears seems to be driving traders away from metals. The Federal Reserve is signaling that it may move more rapidly to shrink its balance sheet.

The Fed now begrudgingly admits that inflation is a serious problem. Whether officials actually will do what is necessary to combat it is another issue. But the threat of a tighter central bank gave futures market speculators an excuse to hit the sell button on gold and silver contracts.

As of this Friday recording, gold is registering a weekly decline of 0.9% to bring spot prices to $1,782 an ounce. Silver is off 3.4% for the week to trade at $22.43 per ounce. Platinum looks lower by 2.8% to trade at $937. And finally, after plummeting to new lows for the year last week, palladium prices are stabilizing this week to come in at $1,827 per ounce, up 2.4% now since last Friday’s close.

Metals markets are caught between the very real threat of higher inflation and the perceived threat of Federal Reserve tightening. In recent days, they have been dragged down by expectations that the Fed will taper and tame price pressures in the economy.

It’s a bit strange to expect Fed officials to suddenly get things right on inflation when they’ve been so wrong all year. Their “transitory” narrative has completely collapsed. So much so that Fed Chairman Jerome Powell this week stated that he wants to retire the term.

In waffling testimony before the Senate Banking Committee, Powell effectively admitted that the inflation problem isn’t transitory.

Jerome Powell: Inflation has run well above 2% for long enough that, if you look back a few years, inflation averages 2%. So, I think we can say that that was not the case going into this episode. Would have been many years since we had inflation at 2%. Umm, so, I think the word transitory has different meanings to different people. To many, it carries a sense of short-lived. We tend to use it to mean that it won't leave a permanent mark in the form of higher inflation. I think it's probably a good time to retire that word and try to explain more clearly what we mean.

The only thing clear about Powell’s inflation outlook is that he doesn’t know what’s coming. There may be a bit of a lull as we head into the end of the year thanks to the recent selloff in commodity prices. But looking ahead to 2022, supply chain stresses combined with easy money policies that won’t be fully unwound anytime soon could feed into another inflation surge.

For now, hard assets are on sale. There are lots of bargains to be had in the bullion space. And physical precious metals also make great holiday gifts.

Money Metals Exchange offers bullion products for all budgets – from copper rounds that can be stuffed into stockings to pure 24-karat gold coins for that special someone.

If you’re looking for affordable bullion gifts that come ready to give, you’ll want to order a handful of our holiday-enhanced Silver Eagles. We are pleased to offer the world's most popular silver coin – the American Eagle – packaged in our exclusive "Merry Christmas" capsule.

This year we are also offering 1/10th ounce Gold American Eagles in “Merry Christmas” capsules.

These gleaming precious metals coins are a great alternative to cash, gift cards, or other run-of-the mill presents.

Those looking to impress with wearable gold should take a look at our 24-karat jewelry. These items ship in gift style box with a certificate of authenticity. And they cost much less than anything comparable you’d find at a typical jewelry store. In addition to the widely popular one-ounce gold bracelet, our full line of gold and platinum bullion jewelry is being released in several days. So, stay tuned for a launch announcement on this new offering from Money Metals.

Gold and silver in any form is virtually guaranteed to bring bigger smiles to people’s faces than the equivalent value represented in paper or plastic.

There is nothing like the timeless beauty and tangible weight of a bullion product. It leaves a lasting memory and will last a lifetime.

The gift of precious metal can be cherished for years or even decades to come. It can help teach children about the value of money, the risks of inflation, and the long-term benefits of saving.

Unlike other popular gifts such as clothing or electronics that will eventually wear out or become obsolete, any quantity of precious metal stands to become more, not less valuable over time.

For other precious metal gift ideas including Goldback currency and silver starter kits, visit MoneyMetals.com.

To ensure timely delivery, please place your order soon. Bullion buying has been unusually strong this year. As we work hard to process high order volumes, some products may have slight delays in getting out. And due to staffing shortages at the Postal Service and other shipping providers, delivery times could be extended heading into the Christmas rush.

Well, that will do it for this week. Be sure to check back next Friday for our next Weekly Market Wrap Podcast. Until then this has been Mike Gleason with Money Metals Exchange, thanks for listening and have a weekend everybody.

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