What Biden’s Big Infrastructure Push Means For Silver

At the moment, the central bank actually wants to see inflation run hotter. It has virtually abandoned all concern over budget deficits and other aspects of fiscal responsibility on the part of Congress.

But Democrats still want to raise additional revenues the conventional way – through tax increases:

  • Former Fed chair and current Treasury Secretary Janet Yellen is pushing for tax hikes on corporations and high earners.
  • Transportation Secretary Pete Buttigieg wants to impose a mileage tax on motorists.
  • Senate Budget Committee Chairman Bernie Sanders recently introduced legislation to dramatically raise the estate tax.
  • Massachusetts Senator Elizabeth Warren, Rep. Alexandria Ocasio-Cortez, and their allies are threatening to impose a wealth tax.

A bevy of new taxes could be just the thing to spook Wall Street and bring the bull market in equities to an unceremonious end.

When investors perceiving rising threats to paper wealth, they are more likely to hunker down financially. And among the safe havens they may find attractive for sheltering wealth are physical precious metals.

Paper liquidations of precious metals traded on futures exchanges are possible during periods of distress in financial markets.

But these types of selloffs, like the one experienced last year amid the COVID panic, are usually fast-unfolding technical events. They aren’t indicative of fundamentally driven trends.

Although the paper selling in March 2020 was quite extreme, strong physical buying in response helped lift the gold market to a record high by late summer – and pushed the silver market to a multi-year high.

Given the extreme nature of the inflationary policies now being pursued in Washington, investors shouldn’t expect the 2020 highs in gold and silver to be any kind of ceiling.

The more rapidly that officials depreciate the currency in the months ahead, the greater the upside potential for precious metals.

 

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