A major Canadian Bank sees higher prices for gold and silver this year. Forecasts by banks are typically conservative. The Fed had some concerns about the froth in the market this past week. Also, some talk about the affects of gold becoming a tier one asset.
There was a dip in gold over the past couple weeks as a reaction to the FOMC meetings predicting a rate hike of 1%. We recently witnessed the hottest print of the FED’s favourite inflation indicator the PCE deflator or Personal Consumption Expenditures hit a 30 year high. Boston Fed president Eric Rosengren is not surprised by high asset valuations as it’s tied to easy FED policy. While a 1% hike could have a big impact on the servicing of loans, it would have next to no affect for savers. A 1% increase in a savings account would not better anyone’s life when real world inflation is much much higher.
The debt in the US is over $28 trillion.