Inflation + CBDC = Long Gold

Macro Perspectives

We have the big July inflation report coming on Wednesday.

Recap: the report last month was hot, at 9.1%. Moreover, the month-to-month change was 1.3% - annualized, that would put inflation in the mid-teens.

With that, the general view in the market is that another hot number will unleash the real inflation fighter in the Fed.

Don't make them angry. As if they've just been waiting for that next big cue. The first 900 basis point spike in inflation wasn't enough to make them blink. But if this next number is hot, watch out!

You may detect some sarcasm.

The reality is, they've watched this unfold very clearly in front of them (trillions upon trillions of dollars added to the money supply), with their own complicity, and have responded with no meaningful action.

Now we have another $280 billion (in the Chips Act), of which only $52 billion is going to chip making companies, and we have the $740 billion bill passed in the Senate a couple days ago (better known as "Build Back Better"). It's fuzzy math. For now, we should consider it all fresh spending (despite the appropriations to revenue raising strategies in the longer run).

Again, it's safe to assume that the Fed was privy to this trillion-dollar spending deluge when they last met, yet the Fed Chair said that their current interest rates stance (at 2.25%-2.5%) should be considered "neutral."

Why? This is inflation by design.

The intent? To inflate away unsustainable sovereign debt (globally).

What's coming? The eventuality of a reset of global debt, and a new monetary system has been well telegraphed.

We've talked about this quite a bit here in my daily notes. The central bankers and politicians have been telegraphing a monetary system that includes a move to a digital dollar ("central bank digital currencies," in global coordination).

And, don't worry, they won't compete with the likes of Bitcoin - they have told us that they will destroy it.

Remember, back in April, Janet Yellen gave a clear warning for the private crypto market. She said the history of money in the United States was littered with attempts at different forms of private money - it didn't work, and they regulated it away.

The government will regulate it away, and strengthen their monopoly on money through a "central bank digital currency."

Not so coincidentally, what's bubbled up over the past week in the Senate? Legislation on regulating private crypto through the Commodity Futures Trading Commission.

With all of the above in mind, it's looking like the right time to own some gold.

NB: The above Alpha Idea was sent out to subscribers. I anticipate a move towards $1945 and ideally closer to $2100 within the next 165 Days (16 Dec 22 - 20 Jan 23), whilst recent local lows hold the line for the foreseeable future.

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