August 14, 2020

We are now halfway through the third quarter.  And this is the quarter where we will begin to see very clearly that the response is MUCH greater than the damage.

Remember, the economy is down $2.3 trillion from the Q4 peak.

And yet we have more than $6.6 trillion worth of fiscal and monetary stimulus still working through the system. 

So what does Q3 look like? 

The Atlanta Fed model is currently projecting 26% annualized economic growth for the third quarter.

The easy math on this says that the economic loss is, and will be, aggressively replenished – maybe even by the year end. 

And that will leave us with trillions and trillions of dollars worth of new money floating around the economy. 

Make no mistake, this is by design. Back in March, when Mnuchin and Powell were confronted with an apocalyptic scenario, they had one option, flood the world with money, reflate GDP and devalue debt.

Things are going according to plan.  The downside?  Inflation is coming. 

With that, we looked at this chart of gold a couple of weeks ago, which projects a move to $2,700.  It has since traded as high as $2,072.