Precious Metals Investment Portfolio

Stubborn Inflation, the Fed Pivot, and Your Retirement Savings

October 17th, 2022 Report

BUREAU OF LABOR STATISTICS REPORT

U.S. Bureau of Labor Statistics 12-month CPI Inflation Report Data

How Gold Prices Have Changed Due to the Federal Reserve’s Actions on Inflation

The Federal Reserve's 'Solution'. Recession.

The Federal Reserve will continue to hold higher interest rates and continue quantitative tightening which can have negative implications for the stock market, the debt market, the housing market, the labor market, and overall GDP. This will also have an effect on gold prices. Raising interest rates in order to counteract inflation and strengthen the dollar will push the price of gold and other precious metals downward. According to said David Meger, director of metals trading at High Ridge Futures: The data signals the Fed will be more aggressive in fighting inflation by raising interest rates at a faster pace, pressuring gold.
Where are we, the American people, as the Federal Reserve moves towards it's 'solutions'?
  • Lending Tree reports that 32% of adults have been late on paying a bill in the last 6 months. 
  • According to a Lending Club Report: 60% of Americans are now living paycheck to paycheck. Up from 55% a year ago.
  • CEO of JP Morgan Chase, Jamie Diamond stated: America will be in a  recession by the middle of next year. Diamond stated that the stock market could easily fall another 20 percent from current levels and the next 20 percent would be much more painful than the first.
  • Billionaire hedge fund manager Paul Tudor Jones stated this about the recession: 'I don't know whether it started now or started two months ago but I'm assuming we are going to get into one. Inflation is a bit like toothpaste. Once you get it out of the tube, it's hard to get it back in.'
  • Boston University economics professor Laurence Kotlikoff told Newsmax: Former Secretary Summers would want Powell (Federal Reserve chairman) to raise interest rates like former Federal Reserve Chairman Paul Volcker did in the late 1970s and early 1980s, when rates jumped to as much as 20%.
  • Recently featured on Fox Business News, it was reported that 98% of CEOs signaled they were preparing for a U.S. recession over the next year or year and a half according to the  survey, The Conference Board Measure of CEO Confidence.

Many ordinary Americans would argue that we are already in a recession and that inflation is still quite present in their everyday lives. The worst of both worlds. The Federal Reserve will continue to raise interest rates and quantitative tightening which will have negative implications for the stock market, the debt market, the housing market, the labor market, and overall GDP. Three questions should be asked: How much pain is too much? And when will the Federal Reserve pivot? And in spite of the 2 previous questions, what can we, as average Americans, do to prepare and protect ourselves?

The Inevitable Fed Pivot, Inflation, and Our Purchasing Power

In late September, The Bank of England back-peddled its quantitative tightening and pivoted to prevent a bond market crash. The English government is allowing the Bank of England to print an unlimited amount of money to prevent their financial markets from seizing up. They are the first to pivot and, of course, much earlier than expected. As you well know, the Bank of England was performing quantitative tightening, the interest rate got too high, and their financial markets were collapsing. The central bank had two options, a deep recession, possibly a depression, or turning the money printers back on. Are we seeing something of our future here?

A return to quantitative easing and turning the money printers back on is a short-term fix at best. In the long run, this will make inflation worse resulting in currency devaluation, bailouts, and zombie companies. For us, a lower standard of living and degraded purchasing power.

Peter Schiff, CEO of Euro Pacific Capital Inc. weighed in on the latest CPI inflation report: "Another hotter than expected #CPI surprised investors. Sept. CPI rose .4%, double expectations. YoY prices rose 8.2%. The 6.6% YoY rise in core CPI is the most since 1982....The Fed is losing its inflation fight. Soon it will surrender."

It is only a matter of time and calculated pain before our central bank, the Federal Reserve, makes its own pivot. It could be in the coming months or as long as 6 months from now, but it is coming. Whether the 'trusted' figures in government want you to believe it or not, the Federal Reserve will be raising interest rates in a recession and a debt-fueled economy, which is simply not sustainable for very long unless the Fed wants to create a near-total collapse within the markets as well. Like the Bank of England, the pivot is inevitable. It is just a matter of when and how much damage is done before they do.

10 year view BUREAU OF LABOR STATISTICS

U.S. Bureau of Labor Statistics 10-year Inflation Report Data

The Federal Reserve, the Recession and Sign Posts to Greater Inflation

When doctors seek to diagnose an illness or disease, they look for symptoms. Here in the US, we have a 10-year yield near 4% and a 30-year fixed mortgage year 7%. This has caused a bear market in the stock market, a real estate slowdown, and overall negative GDP. All this so far, and the Federal Reserve has not even applied its full force. Stated quite simply, the Fed is intentionally causing a recession by raising interest rates in order to slow down inflation. What does this mean for us and our living standards? The maximum amount of tolerable pain that the U.S. can bear.

According to the Federal Reserve chairman, Jerome Powell, the Fed will continue to raise interest rates through 2022 into early 2023 and possibly for another year. This is not possible given the present state of the economy. Again, the UK central bank just caved and the US is next. What can we do, as individuals to lessen the pain we feel and sustain and protect our wealth and retirement savings?

Gold and Silver Invetment

2008-2012 Recession S&P Data

Ordinary American People and Protecting Our Retirement Wealth. Gold IRAs

Central banks control how much fiat paper currency is pumped into the system, not you. With inflation on the rise and thereby weakening the dollar, physical gold and silver investments have historically moved in the inverse direction to the dollar's buying power. Precious metals investments, whether in the form of gold IRAs or private ownership provide protection from stock market volatility and weather the inevitable cycles of inflation and recession. Ownership of tangible precious metals puts the control back in your hands.
Simply put, money, or fiat currency, is not an investment. Money is an instrument to transfer goods and services from one party to another party. The only thing that matters, day to day, is your actual, real buying power, not how many dollars you have in the bank. In retirement, when true inflation reaches 15%, your cost of living potentially doubles every 5 years. One of the key benefits of investing in gold and Gold IRAs is offsetting the weakening dollar and thereby securing your retirement savings. Whether it is a bear or a bull market, precious metals are the ideal asset to hold for portfolio diversification and safeguarding retirement. Simply stated, gold, silver, and other precious metals have stood the test of time and will continue to. Click the button below to attend a free web conference where you will learn about how a gold IRA and gold investments can help retirement savers like you fight inflation and protect your wealth. If you are looking for the best Gold IRA Investment companies to start your IRA rollover. See our gold IRA company reviews here
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Gold IRA FAQs

Who holds the gold in a gold IRA?

Gold, and other such precious metals are to be stored and insured in an IRS-approved facility. Typically, a third-party company partnered with the Gold IRA company manages the IRS-approved depository

Before selecting a Gold IRA company, review the information about the storage facility options provided.

What is the minimum investment for a gold IRA?

Minimum investments will vary dependent on the gold IRA company you choose. It is incumbent that you take the requisite time to research the various providers for your specific precious metal investment strategy.

We have provided a list of reviews here of the top precious metal ira companies with a range of minimum investment amounts.

 

What are the fees for a gold IRA?

Minimum fees will also vary dependent on the gold IRA company you choose. Setup fees, annual fees, storage fees, and custodian fees are all subject to the discretion of the gold IRA company you choose.

Please see the list here of the best precious metals investment companies for buying gold in order to review the fees that apply.

What Precious Metals Are IRA approved?

Precious Metal IRAs can invest in IRS-eligible gold, silver, palladium, and platinum bullion and coins. The IRS maintains very specific regulations and requirements about the design, size, weight, and metal purity that determine which gold bars and coins can be held in a gold IRA or precious metals IRA.

Investment grade gold coins and bars are required to be at least 99.5% pure, and silver coins and bars must be at least 99.9% pure.

PRECIOUS METALS AUTHOR

Adam ONeill

Author, lifelong investor, and creator of PreciousMetalsInvestmentPortfolio.com.