Gold and silver prices have exploded. Gold’s up $390 since its March low, silver up $10.60. Silver’s gain is 87% versus gold’s 26%. This is what was supposed to happen being that the GSR (gold silver price ratio) topped 100. Silver has still more catching up to do.
The renewed interest in the metals undoubtedly comes from recognition that all this massive money printing and distribution cannot end well. Many former employees are now making more money not working than they were when working.
Consider these numbers: The federal budget deficit was $2.7 trillion in the first nine months of fiscal year 2020, $2.0 trillion more than the deficit recorded during the same period last year. For March 2020, fedgov’s budget deficit was $117 billion, which was a $30 billion decrease from the $147 billion deficit recorded in March 2019.
Another stimulus program is in the works. The House passed the CARES Act 2 in May, which calls for $3 trillion in additional spending. The Senate did not act on it, and Senate Majority Leader McConnell has said that $1 trillion is closer to what he is thinking. They will probably meet in the middle but with it being closer to $3 trillion than $1 trillion.
Further, we have cities and states continuing to shut down restaurants, gyms, bars, hair salons, nail salons, and other sources of tax revenues. Those states and cities will be doing without tax revenues, and we can expect them to ask the Fed and the Treasury for assistance.
As noted, this is not going to end well. Gold and silver prices are moving in the right direction.
