Refueling The Rockets

Today’s article will be relatively simple and straightforward. At the risk of repeating what I’ve said since June 6, the forecasted pullback is clearly well underway. The only question that matters now is where the lows will be before the spectacular rally to follow. Fortunately we may not need to be so precise, because the trigger for that rally is obvious, in my opinion: more currency printed out of thin air to fund more handouts from the government.

With the November elections fast approaching and political rhetoric heating up, it is only a matter of weeks before the Republicans and Democrats agree on new stimulus measures to replace the $600/week that most Americans lost this month. Neither side wants to be blamed for the lack of Doritos while watching Netflix 24/7 or by those who truly need the assistance. At the same time, although the Fed downplayed the need for more stimulus in their Minutes yesterday, make no mistake, they will be ramping up the printing presses again to facilitate their new average inflation target to be announced at the next FOMC meeting. This means targeting official inflation rates above 2%. I say “official” because we’re already seeing rampant inflation due to supply shocks in many sectors, most notably meat and more recently lumber. I only expect this to get worse in the months ahead just as the U.S. Treasury prepares to send out bombers to rain dollars from the skies, which the Fed has already financed and needs no approval from Congress. All of this means the rally in Gold and Silver is just getting started. Miners are getting ready to explode higher.

Ahead of that and what we’re seeing now, in my opinion, is a pullback to reset sentiment and squeeze out the weak longs that arrived late to the party before the even bigger celebration takes place soon. We’re also getting signals from other markets that the current correction is not done yet.

Stocks are finally starting to look soft…

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Disclaimer: The views and opinions expressed in this material are those of the author as of the publication date, are subject to change and may not necessarily reflect the opinions of Sprott ...

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