Stagflation to Terrorize the Economy in 2023

January 7, 2023

Gold and silver markets got off to a strong start in the first couple days of trading this year before running into some selling pressure on Thursday – only to bounce back again on Friday morning.

A superficially strong jobs report has raised expectations for further rate hikes by the Federal Reserve and boosted the U.S. dollar on foreign exchange markets. Metals futures traders reflexively responded by hitting the sell button yesterday only to turn around and buy today.

As of this Friday morning recording, gold remains positive for the week -- up 2.2% since the final close of 2022 to trade at $1,873 per ounce. Silver, on the other hand, shows a slight weekly loss of 0.3% but is also advancing nicely here today to bring spot prices to $24.11 an ounce. Platinum is up 0.9% for the week now to come in at $1,103. And finally, palladium is essentially unchanged for the week to trade at $1,848 per ounce.

Investors often look at the first few trading days of a New Year for clues as to market trends that may develop for the rest of the year.

Financial News Report: U.S. stocks fell sharply on Thursday as fresh evidence of a tight labor market deepened fears the Federal Reserve will keep interest rates elevated for longer than expected.

Financial News Reporter: No real indication of what the Fed is thinking of for the next meeting on February 1st, but in December, they saw an economy that was still running too hot in terms of the labor market and inflation that was still unacceptably high. They did face a concern, however, that with most of the credit impulse that they had put into place yet to hit the economy, they had two risks. One, tighten too little and let inflation and expectations go up too much. Tighten too much and risk recession.

The major economic themes of 2022 were rising inflation and rising interest rates. They combined to create miserable conditions for investors in conventional financial markets.

In 2023, interest rates will likely peak as the Fed slows and then ends its hikes. Central bankers are expected to raise rates by a sized-down quarter point at their next meeting in February.

Some observers see the Fed needing to hike further given a low official unemployment rate and still elevated inflation rate. But Wall Street and Washington, D.C. have signaled that they can't take much more interest rate pain.

It could be one and done for the Fed in 2023. There is even a chance Jerome Powell and company could begin cutting rates later in the year if the economy stumbles badly.

As for inflation, it is widely forecast to come down from its double-digit highs of 2022 – in large part because higher borrowing costs for consumers and businesses are expected to depress demand for goods and services.

But the potential for supply-driven upward price pressures also exists. Some energy and commodity market analysts are warning of price spikes to come due to lack of investment in new production combined with geopolitical rifts around Russia.

Stagflation could be a major theme for 2023. In such an environment, both stock and bond markets will likely continue to struggle. Precious metals, meanwhile, will likely continue to outperform. Gold and silver each posted slight gains during 2022 even as financial assets posted deep losses.

Investors should also expect the unexpected. Inherently unpredictable markets have a tendency to defy popular expectations and produce outcomes that leave investors who haven't covered their bases vulnerable.

Central banks around the world acquired gold bullion bars at a record pace last year. Official buying of physical gold should provide something of a floor underneath prices in 2023.

Whether gold gains popularity among ordinary investors this year as a safe haven remains to be seen. The public, unfortunately, may not become interested in a big way until after gold launches into a record-setting run. It’s then that a possible mania phase could ensue.

In the meantime, gold and silver will continue to fill an essential niche in a well-balanced investment portfolio for 2023 and beyond.

In other news, Money Metals has just been renamed the “best overall” dealer in the United States for 2023 by Investopedia.com, a top authority in the world’s investment industry.

As our listeners and customers know, Money Metals also leads the sound money movement in the U.S., working to end state and federal taxation of the monetary metals while advancing other policies that benefit precious metals investors, the industry, and the nation as a whole.

“Its customer-centric focus has translated into highly competitive pricing, personalized service, a pathway for new investors, and one of the best online reputations, making Money Metals Exchange our choice as the best overall online gold dealer,” wrote Investopedia’s analyst Richard Best after he carefully examined all major online dealers.

The global investment news and information hub made special mention of Money Metals’ secure, insured depository (one of several integrated services that other dealers do not provide) which presently stores gold and silver on behalf of almost 10,000 individuals, IRA accounts, and businesses.

Given the overwhelming demand for convenient, secure storage, Money Metals Depository is constructing a new 40,000 square foot vaulting facility scheduled for completion in early 2024.

Money Metals' new building will be the largest private depository west of the Mississippi River... several times larger than the U.S. Bullion Depository at Fort Knox. In contrast to the mysterious government installation assumed to hold most of America's gold reserves, Money Metals Depository is routinely audited.

Investopedia also lauded the significant news and educational content along with other investor tools Money Metals provides daily in order to assist and educate its customers.

Of course, we are deeply honored to have again received the top ranking from the world’s leading investment authority. Even though we are 'only' the 3rd largest retail bullion dealer at present, we are thankful to be recognized as the best.

While Money Metals is known for fair, transparent pricing and fast delivery of customer orders, we’re especially proud of our no-pressure sales approach, wide array of services, leadership in the sound money public policy arena, and significant educational efforts.

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 great weekend everybody.

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Mike Gleason is a Director with Money Metals Exchange, a national precious metals dealer with over 50,000 customers. Gleason is a hard money advocate and a strong proponent of personal liberty, limited government and the Austrian School of Economics. A graduate of the University of Florida, Gleason has extensive experience in management, sales and logistics as well as precious metals investing. He also puts his longtime broadcasting background to good use, hosting a weekly precious metals podcast since 2011, a program listened to by tens of thousands each week.


In 1934 President Franklin Delano Roosevelt devalued the dollar by raising the price of gold to $35 per ounce.
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