Goldman Sachs paints bullish picture for silver, warns “risks are skewed toward dollar weakness” with a possible blue wave

Goldman Sachs paints bullish picture for silver, warns “risks are skewed toward dollar weakness” with a possible blue wave by Mike Gleason for Money Metals

Gold and silver markets slumped this week as stimulus talks faltered again in Washington.

Even though the White House upped its offer to $1.8 trillion, House Speaker Nancy Pelosi refused it – not wanting to give President Trump any kind of political victory ahead of the election.

Meanwhile, the President continues to campaign for stimulus. He is bucking Senate Republicans by offering to go even higher than $1.8 trillion.

Here’s what President Trump told Stuart Varney of Fox Business on Thursday:

Stuart Varney: You don’t expect a phone call from Speaker Pelosi, but you would go higher. How much higher would you go? How much higher would you go?

President Trump: Yeah, I would, and the Republicans will too, because we like stimulus, we want stimulus, and we think we should have stimulus because it was China’s fault. It was not the American workers’ fault or the American people.

Stuart Varney: If you want to up your offer above $1.8 trillion, what would that extra money go to?

President Trump: It would go to the worker. It would go to the people, directly to the people so they can live nicely and their lives won’t be shattered because of China.

Stuart Varney: Okay. Have you told the Secretary Mnuchin to get out there and offer more than $1.8 trillion?

President Trump: I’ve told him. So far, he hasn’t come home with the bacon.

Even if an agreement were suddenly reached to bring home the bacon, it would be nearly impossible this late into the calendar for additional relief payments to arrive in Americans’ pockets before they go to vote.

Perhaps that will clear the way for a deal to be reached. It’s a near certainty that more stimulus will be coming sooner or later, one way or the other.

A case can be made that sending cash directly to millions of Americans is a fairer and more efficient way of artificially stimulating the economy than other alternatives. Feeding stimulus through a labyrinth of programs run by federal and state bureaucrats will inevitably produce waste and corruption as a byproduct. Alternatively, having the central bank pick winners and losers by buying up certain types of financial assets would inevitably favor Wall Street over Main Street.

Of course, “free money” however doled out isn’t without cost. The national debt recently topped $27 trillion. That represents an obligation of $216,000 per taxpayer.

It also represents a massive amount of future inflation if policymakers wish to keep kicking the can down the road and putting off the day of reckoning for unpayable debts.

On Wednesday, the Labor Department reported the producer price index rose in September by 0.4%. That was a bigger increase than economists had been expecting. Food costs surged by 1.2% for the month. That means struggling consumers can expect to pay more for groceries.

This week, though, the U.S. dollar strengthened versus foreign currencies. Gridlock over stimulus is producing de facto fiscal restraint in Washington, however unintentional and temporary it may be.

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