Craig Hemke – Macroeconomic Factors Keeping Commodities And Precious Metals Well Bid
Craig Hemke, Founder and Editor of TF Metals Report, joins us to review the continued moves higher in 2022 with the precious metals and commodities sector, and the macroeconomic factors driving these trends. We noted that the mining stocks have been outperforming gold and silver lately, and that even today with the initial sell-off, most of the mining stocks clawed their way higher by the close. We also reviewed that GDX just made it’s highest weekly close since September of 2020, and the GDXJ made it’s highest weekly close since June of last year.
Craig pointed out that with the Chinese credit impulse moving higher this year, that seems to coincide nicely with rising commodity prices. The point was also made that much of the reason for inflation is the excessive amounts of liquidity that were pumped into the system, and that this is the primary driver, where supply chain issues and the Ukraine war only accentuated the trends already in motion. We then recounted what former Fed president Bill Dudley mentioned last week about advising the central bank to “inflict more losses on the stocks markets” which would be a reverse wealth effect scenario, that may get consumers feeling more poor, buying less, and thus reducing demand and inflation. The reality is that real rate will remain negative even if inflation has peaked and that is constructive backdrop for higher gold prices.
We wrap up with a discussion of which headlines will continue to move the markets, and how the environment of stagflation will keep the PMs well bid as we see more financial volatility in the markets.