Increasing Velocity Of Money Will Be The Big Upside Surprise For Gold As Trump Enters The White House
With continued uncertainty in the gold and silver markets, one of the greats in the business takes a look at what to expect for the gold market as we get ready to head into 2017, with Donald Trump as President of the United States.
By John Hathaway, Tocqueville Gold Fund
November 29 (King World News) – In our view, the systemic risks that existed prior to the presidential election have not suddenly vanished. Most important among these is a massive bond-market bubble. Close behind, equity valuations remain at historically extreme levels. How the new administration deals with these vexing issues, assuming that it even begins to comprehend them, is a complete unknown. Any unwinding promises to be precarious, full of pitfalls and setbacks, all of which are reason enough to hedge bets on a trouble-free return to robust economic growth with exposure to gold and precious-metals equities…
Reasons for post-election optimism abound. We agree with the following assessment by MacroMavens (11/17/16):
The vicious cycle of low rates – forcing households to save twice as hard, further depressing growth and inflation, pushing interest rates lower still and making saving even more urgent – will finally be broken. Rather than ping-ponging from one asset bubble to the next, papering over the deep wounds in between with more and more debt, we will finally get back to genuine economic growth built on entrepreneurial spirit and a rising standard of living for the populace. Velocity of money will at last lift off the mat.
To us, the key word in the above quote is “finally.” Getting from point A to point B could prove extremely challenging and time-consuming. Gratification of market expectations seems unlikely to be instant.