The Fed Goes Full Dove: Rocket Fuel For Gold, Silver And Mining Stocks

MBA, Market Analyst & Author @ The Mining Stock Journal
July 30, 2021

I ordinarily do not spend time reading the FOMC policy statement after it’s released, saving that brain damage for CNBC. But I read the June release to assess for myself whether or not the Fed had tilted toward a more “hawkish” policy stance and decided that it had not. Because I’m starting to turn bullish on the precious metals sector, I decided to read the July release as well and compared it to the language in the June statement to see if the language had shifted. The degree to which the policy stance has moved back to 100% “dovish” has been understated by the mainstream media.

As an example, the Fed removed the dollar amount of its monthly Treasury and mortgage purchases ($80 billion and $40 billion). In its place it said that it would continue buying these securities “at least at the current pace.” I interpret this language – and the removal of the specific dollar amounts – as opening up the possibility of increasing the amount of monthly QE. In other words, removing the specific dollar amount levels is a subtle way to remove the boundaries on the dollar amount. The Fed also minimized its view of price inflation by referencing “muted inflation pressures.”

I have said all along that the Fed would eventually be forced to print a lot more money and I believe the new language and phraseology of the latest policy statement is setting up this eventuality. This will be rocket fuel for gold and silver.  Craig “Turd” Ferguson invited me onto this Thursday Conversation podcast to discuss the Fed and the precious metals sector – click on the graphic below to access the fun:

The mining stocks are once again historically cheap.  At some point this year I will be raising the subscription price, though existing subscribers will be grandfathered at the current monthly rate.   If you would like some ideas for investing in mining stocks, take a look at my  Mining Stock Journal

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Dave Kranzler spent many years working in various analytic jobs and trading on Wall Street. For nine of those years, he traded junk bonds for a large bank. He has an MBA from the University of Chicago, with a concentration in accounting and finance. He currently co-manages a precious metals and mining stock investment fund in Denver. My goal is to help people understand and analyze what is really going on in our financial system and economy. Dave publishes the The Mining Stock Journal a bi-weekly subscription newsletter that features junior mining ideas as well as relative value ideas in large cap mining stocks.

 

One cubic foot of gold weighs more than half a ton (1,306 pounds).

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