Easy Money and Future Inflation

10/15/2020 5:00 am EST

Focus: MARKETS

Mary Anne & Pamela Aden

Co-Editors, The Aden Forecast

We wouldn’t be surprised to see a longer lasting period of economic weakness. We hope not, but as each month passes, it just doesn’t look like the economy will bounce back soon, cautions Mary Anne and Pamela Aden, market timing experts and co-editors of The Aden Forecast.

That’s especially true considering the massive hit the economy is taking due to the growing coronavirus. We aren’t gloom and doomers — but this is our current reality. And it’s not only in the U.S., this same trend is happening worldwide.

This means there’s going to be massive ongoing expenses that’ll result in the biggest debt ever known to mankind. It’s already happening and it’s totally unprecedented.

For now, the Fed will keep producing money printed out of thin air to pay for all of these expenses for as long as it has to. In fact, it’s planning to create about $1.5 trillion over the next three years.

Again, to put this into perspective, it took 100 years for the Fed to reach its first $3 trillion in new money. But this year, it only took three months to chalk up its next $3 trillion.

The numbers are mind boggling and it could eventually result in one of the biggest inflations we’ve ever seen... at least that’s what this is all telling us. Remember, easy money is the direct cause of inflation and the money now being created has never been easier.

This tells us gold and the metals will continue to soar and they’ll be the best investments in the years ahead. Don’t be worried if we see a steeper short-term decline in gold because it would be normal. But the major trend is up and we recommend keeping invested in the gold sector.

Meanwhile, the U.S. dollar will fall a lot further. It strongly suggests stocks could head lower, despite super low interest rates, and bond prices will remain vulnerable.

Super low interest rates has been driving stocks higher since 2009 and it’s still working. This in turn has led to the disconnect between the stock market and the economic reality on Main Street. But this disconnect may not last too much longer.

Stocks remain very expensive. Growth stocks have soared compared to value stocks, and are way out of whack on the upside. This continues to reinforce that it’s best to stay on the sidelines for the time being. Risk is high and the warning signs are telling us to pay attention. Keeping cash during these times is not a bad thing.

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