Adrian Van Eck's Hotline on Money and the Economy
Message 20107641
"SO BRACE YOURSELF. If this is the beginning of the move that I think it is, America will experience a new round of inflation. It will be denied on all sides, as it is being denied now. (I know of no one who believes the government’s inflation numbers. If the real inflation data were subtracted from nominal GDP, it would be seen that both growth and productivity are well below what they claim today.)
Nevertheless, while denying there is inflation, the government and the ISM are boasting that prices paid and received by businesses are climbing at the steepest rate in years, and they say this new pricing power has come just in time to save many businesses that were starved for funds before. So forget whether the Fed dropped the word “patient” from its new announcement. And don’t worry about a quarter-point “tightening” at the end of June or the middle of August. You are seeing the first bales of money dropping from Bernanke’s helicopters. Before they are done, true inflation will be up to 8%, although the government will claim it is either 5% or 6%. And everyone in the financial media, especially the Wall Street Journal and Investor’s Business Daily, will brag about how modest and benign inflation is.
During this new period of DENIAL, Gold is acting as if there is no inflation and will be no inflation. Well, along with my son Jonathan Van Eck I believe they will be proven wrong about inflation and the value of Gold again today, as they were in late 1979. But this time the surprise will be to the upside.
By the way, I will deal with this in detail later. But Alan Greenspan’s fourth term (17 years) officially ends in days. He wants to serve another 18 months, to become the longest serving Fed Chairman in history. No one has mentioned another term officially yet. Maybe the President will let Alan hang by his thumbs for the rest of the year. Greenspan will know the whole time that he now serves at the pleasure of the White House, and if he does something to anger them his dream of a record will be smashed. Just thought you’d like to chew on that. " |
