Wednesday

Monday

Watch the latest interview with Keith Weiner of Monetary Metals. This features Jim Forsythe of Citizens for Sound Money…

Tuesday

July 12, 2022

Dickson Buchanan Jr.

Merrill Lynch Includes Gold in their FAANG 2.0 Investment Thesis

Every week Merrill Lynch publishes a Capital Market Outlook Letter. The letters provide market commentary, research and analysis, and the occasional investment idea. Merrill Lynch (together with parent Bank of America) is the third largest brokerage firm, managing over $3 Trillion in client assets^[1]. When a firm of that size speaks up, you should listen.

Starting around March of this year, they disclosed an investment thesis called FAANG 2.0. It’s a fascinating idea and gold plays a prominent role. Let’s unpack it.

Read it all HERE

Wednesday

From Keith Weiner, C.E.O. of Monetary Metals

Read it all HERE

The Quantity Theory of Money is Dead Wrong

However, there is a more subtle zero-sum view about money. According to the Quantity Theory of Money, a rising money supply causes rising prices, and rising prices are caused exclusively by a rising money supply (I have written extensively about nonmonetary forces driving up prices: mandatory useless ingredients, lockdown whiplash, green energy restrictions, trade war and tariffs, and actual war in Ukraine. For a complete review of this analysis, download our Gold Outlook Report 2022).

Prices have certainly been on a tear recently. The Consumer Price Index is over 8% for the first time in a very long time. So, what is the Fed to do about it, what central plan should it impose?

The Quantity Theory holds that, to control inflation, the Federal Reserve should reduce the quantity of dollars, or at least reduce the rate of increase. It is supposed do this by hiking interest rates (it has hiked twice so far this year). At higher interest rates, the theory holds that there should be less new borrowing. Thus, the rate of new money coming into the economy is reduced. And inflation is supposed to be mitigated.

According to this theory, there is a tradeoff between unemployment and inflation. So, in order for consumers to get more for their money, workers need to be laid off.

But less borrowing, of course, means lower production. This logic commits a similar error as the above idea of harming producers. Only, the target here is the workers who produce the goods. To state the contradiction explicitly: fewer workers, producing less goods, will cause lower prices.

Read it all HERE

Monday

At first I laughed when I watched this fellow interviewed. David Dodge believes that the international monetary system is sufficiently ‘robust’ that Canada does not need to hold gold.

So Canada’s gold, all of it, was used to invest in paper money!

Then I stopped chuckling.

Obviously, confidence in the international monetary system is not the real reason that Canada no longer owns any gold. Why did Canada really have to forfeit all its gold?