Rosland Capital News
Reality Check: Gold Expert Sees Inflation, Stagflation on Horizon
Published 1/19/2010
NEW YORK (JAN. 19, 2010) – Jeffrey Nichols, Senior Economic Advisor to Rosland Capital, had the following commentary based on today’s market activity and the week ahead. Key points:
- US Economy is Looking at Double Dip with Stagflation Topping
- Look for BRIC economies to Pave the Way
- Private Investment and Official Demand to Fuel the Bull’s Stampede
- Continued Volatility Will Characterize Gold’s Rise
Second Dip of the Recession on the Way
I believe we are heading into a period of further economic weakness here in the United States and in the other “old” industrialized nations – a “double dip” – that will become readily apparent by mid-year if not sooner. At the same time, by summer, we will begin to see some undeniable signs that U.S. inflation is again stirring.
Looking further ahead, the industrial world faces an extended multi-year period of stagflation – low economic growth, continuing high unemployment, a drop in average living standards, and consumer price inflation well above the acceptable rates of recent years.
Meanwhile, the newly industrialized or emerging economies in Asia and elsewhere – led by China, India, Brazil, and, yes, Russia – will fare well by comparison with relatively strong growth in output and employment, restrained consumer price inflation, and appreciating currencies versus the U.S. dollar, euro, and the British pound.
Here in the US, our economic pain is largely a consequence of, consuming and spending more than we could afford at all levels of government and society. In a real sense, we are bankrupt and the “repo man” is now knocking on our door.
At the same time, judging from the Fed’s own balance sheet, quantitative easing continues. For now, I can’t see how the Fed can do otherwise – until there is a significant stabilization in the housing market, a sustainable and continuing improvement in the labor market (with declining unemployment), and rising consumer confidence . . . or until inflation rates are so high that a return to price stability takes precedence. In the meantime, the Fed must continue buying U.S. Treasury debt and housing agency debt with newly printed money.
Without the political will power by policy-makers to “bite the bullet” and a willingness by Americans to accept a lower standard of living for a period of time, we can expect a continuing balancing act by government between the demands of our foreign creditors and the bond market and the voters, who may turn on incumbents are unable to deliver on their false promises of a quick return to the good old days.
To arrange an interview with Jeffrey Nichols, please contact Liz Cheek of Hill & Knowlton at (212) 885-0682 or elizabeth.cheek@hillandknowlton.com
About Rosland Capital
Rosland Capital LLC is a leading precious metal asset firm based in Santa Monica, California and buys, sells, and trades all the popular forms of gold, silver, platinum, palladium and other precious metals. Founded in 2008, Rosland Capital strives to educate the public on the benefits of investing in gold bullion, numismatic gold coins, silver, platinum, palladium, and other precious metals.
About Jeffrey Nichols
Jeffrey Nichols, Managing Director of American Precious Metals Advisors and Senior Economic Advisor to Rosland Capital, has been a leading precious metals economist for over 25 years. His clients have included central banks, mining companies, national mints, investment funds, trading firms, jewelry manufacturers and others with an interest in precious metals markets.