Why gold? Why now?
Why should investors even consider taking a position in a gold junior, given gold's lackluster performance so far this year?
Ryan McMaken, writing in Mises.org, criticizes the Fed for failing to take bold action to reduce its $9 trillion balance sheet, while maintaining it is serious about fighting inflation through interest rate hikes. Such a move would directly reduce the money supply by reversing QE, and it would also reduce asset prices by producing a deluge of government bonds and mortgage-backed securities.
Powell himself has said that ending the current bout of inflation will require pain in the form of job losses, and he has strongly implied that ending inflation could take years. Now, thanks to Powell's mistakes, price inflation is supercharged, and even he admits it could take years of economic stagnation or decline to bring it under control.
Moreover, as Roach recalls, the premise of the core inflation rate is to dismiss major price shocks as transitory, something the Fed Chair during the inflationary 1970s, Arthur Burns, did until it was too late :In Roach's view, and I tend to agree with him:
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