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L.T. Gold remains attractive

November, 22 2021

GOLD 2021-11-22 at 13.51.06

 

Now imagine replacing Powell with Brainard would signal continuity of policy in the near term and the importance of Biden’s values for the longer haul. Now is the right time to send that message.

This is the best possible time to make a switch, precisely because there is agreement at the top of the Fed about the goals its monetary policy should achieve in the next few months: keep short term interest rates very low till the end 2021. If there is any confusion in the bond market about the Fed’s policy stance, the pandemic demonstrated that – when needed – the central bank has ample tools to move interest rates and affect the availability of credit at all maturities.
Therefore  :

  • +400B of QE
  • 0% rates
  • Twin deficits/GDP at double digits
  • No capex growth among commodity producers
  • Green revolution & ESG policies in full mode

This could be a macro regime change & gold remains historically undervalued.