- Newmont Leads Gold Stocks Higher
- America’s National Debt Continues Surge
- Dr. Kirk Elliott’s Thoughts on the Fed’s Next Move
With inflation stickier than most initially predicted, gold and gold stocks have benefited tremendously. What’s more, the Fed refuses to raise rates despite rising shelter costs, strong consumer demand and higher food prices. According to data from April 30th, the Case-Shiller national home price index hit a fresh all-time high in February.
Last week, Newmont topped all forecasts, reporting robust earnings that sent the stock up nearly 13% on April 25th. Newmont is the world’s largest gold producer and its strong fiscal performance could be a bellwether of things to come for the majors…
Tom Palmer, Newmont’s President and Chief Executive Officer, stated,
“Newmont delivered a strong first quarter operational performance, producing 2.2 million gold equivalent ounces and generating over $1.4 billion in cash from operations before working capital changes.”
These results lifted almost all miners as inflows into gold stocks surged. Newmont’s remarkable achievement of reducing its all-in-sustaining costs for gold production by 33% compared to the previous quarter, to $1,148 per ounce, sparked the massive rally.
Global Debt Balloons Beyond $300 Trillion
On a recent pod, Aaron and Alex discussed how the U.S. national debt soared by roughly $1 trillion over the last six months, creating an epic rally in gold’s price. Shockingly, the debt could rise even faster in a few months. Biden’s budget proposal could lead to roughly a $2 trillion deficit this year.
According to Reuters, global debt hit a record high of $313 trillion in 2023…
It’s no coincidence that central banks from numerous countries cumulatively purchased a near-record amount of gold last year. With debt piling on for many nations faster than ever before in human history, several central banks are attempting to protect their currencies as best they can with gold.
Dr. Kirk Elliott: No Rate Cut Coming
On the pod, Dr. Kirk Elliott and Aaron discuss where interest rates may be headed. Aaron argues that higher rates won’t help because they drive shelter costs higher.
The reported rate of inflation and the actual rate of inflation are different, according to Dr. Elliott. He believes the actual rate is around 12-15% today. To kill inflation, Elliott contends, interest rates have to be higher than the current inflation rate. Given outstanding debt levels, this is an impossibility.
The Fed is in a tough spot…
Dr. Elliott argues that the Fed can’t raise rates without wrecking the economy, but it also can’t lower rates or inflation will increase. Either way, the Fed and the American economy lose. While the market is holding out hope for a near-term rate cut, it is unlikely.
