{"id":36055,"date":"2021-05-20T04:54:14","date_gmt":"2021-05-20T11:54:14","guid":{"rendered":"https:\/\/goldco.com\/?p=36055"},"modified":"2023-10-25T12:44:54","modified_gmt":"2023-10-25T19:44:54","slug":"fed-policies-continue-to-drive-gold-and-silver-higher","status":"publish","type":"post","link":"https:\/\/goldco.com\/fed-policies-continue-to-drive-gold-and-silver-higher\/","title":{"rendered":"Fed Policies Continue to Drive Gold and Silver Higher"},"content":{"rendered":"

Sometimes it can be tough to be critical of the Federal Reserve. On the one hand, the Fed’s conduct of monetary policy has been incredibly damaging in so many ways. It has helped spur inflation, it has been responsible for causing a series of recessions and financial crises, and it has monetized government debt, allowing the federal government to engage in reckless and out of control spending.<\/p>\n

On the other hand, the Fed\u2019s policies have helped drive up the prices of gold and silver too, making them one of the most popular investments today for those looking to protect their wealth. So if you hold gold or silver in a precious metals IRA<\/a> and you\u2019ve been enjoying the gains you\u2019ve made in the past few years, the Fed’s monetary policy is at least partially responsible.<\/p>\n

Going forward, the Fed doesn\u2019t look like it\u2019s going to change its tune anytime soon. Easy money is here to stay, with the Fed committed to pumping at least $1.5 trillion dollars into the financial system every year through its asset purchases. As long as that continues, the price of gold and silver should continue to climb<\/a>.<\/p>\n

What Fed Officials Are Saying<\/h2>\n

While ordinary Americans are wondering whether they\u2019ll be able to fill up their cars, and are looking nervously at food prices that continue to rise, Fed officials seem to think that nothing is going wrong. They\u2019re seemingly oblivious to rising prices throughout the economy that are pinching Americans\u2019 pocketbooks. After all, when you\u2019re making ten times as much money as the average person, the average American\u2019s worrisome price increase is just a rounding error to you.<\/p>\n

The Fed’s singular focus today seems to be on the job market and improving employment figures. And Fed officials think the key to success there is to continue to pump money into the system to spur hiring. Fed Vice Chairman Richard Clarida just recently stated that the continuing weakness in the job market means that the Fed needs to continue ramping up the stimulus<\/a>.<\/p>\n

The problem there is that the Fed is working at cross purposes to the administration, and even to itself. The Biden administration continues to push for greater federal unemployment benefits, which have incentivized many unemployed Americans to stay out of the workforce. After all, if you can make $45,000 a year on unemployment insurance, why take a job that might pay you $50,000? Is it worth a year\u2019s worth of waking up early and taking orders from someone else to make what ends up being maybe $3,000 extra a year after taxes?<\/p>\n

The worst part of it is that the federal government can\u2019t afford to pay that unemployment insurance. The only way it can do so is to issue new Treasury debt. And who is buying that debt? The Federal Reserve. So at the same time the Fed is funding the government\u2019s payments that keep people from returning to work, the Fed is also claiming that the continued weakness in the labor market requires more monetary stimulus. Only in Washington could somebody say something like this with a straight face and be taken seriously.<\/p>\n

Atlanta Fed President Raphael Bostic has even stated that he thinks inflation is healthy<\/a> for the economy today, seeing rising inflation as a positive sign. And like many other Fed officials today, he thinks that the price increases we\u2019re seeing today are just transitory, and that they\u2019ll disappear by the end of the year.<\/p>\n

With continued price rises, millions of Americans still out of the workforce, and shortages of computer chips and other raw materials necessary for production, it\u2019s hard to imagine the US economy improving anytime soon. And even if things \u201cimprove,\u201d it\u2019s hard to believe that prices will come back down to pre-pandemic levels.<\/p>\n

Fed Unperturbed, Consumers Sweating Bullets<\/h2>\n

Even those who might otherwise support President Biden are starting to get nervous<\/a>, such as former Treasury Secretary Larry Summers. Summers expected inflation, but not nearly to the extent that we\u2019ve seen so far. In his mind, the Fed\u2019s actions seem to anticipate a benign situation such as a gentle and gradual recovery, rather than a stagnation or worsening.<\/p>\n

It does seem hard to believe that the Fed thought that trying to boost inflation was a good idea, particularly at a time when tens of millions of Americans had just lost their jobs and the economy was in a shambles. If consumer spending is the supposed engine that drives the economy, how is making things more expensive going to help boost spending?<\/p>\n

It\u2019s almost laughably nonsensical, but it\u2019s gotten many Americans to sit up and take notice. And now inflation expectations are rising in the US, after years of remaining steady. Both Wall Street and Main Street have seen the price increases that have afflicted us, and they\u2019re starting to prepare for the worst.<\/p>\n

While the Fed may think that inflation and rising prices will be only transitory, many consumers and investors may not be of the same opinion. And if they expect inflation to continue rising, they\u2019ll start taking measures to protect themselves.<\/p>\n

Protecting Your Wealth<\/h2>\n

One of the popular ways some investors protect their wealth is by investing in precious metals such as gold and silver. Gold and silver have proven their ability to continue gaining value even during times of economic weakness, such as during the 1970s stagflation or in the aftermath of the 2008 financial crisis.<\/p>\n

You can even invest in physical gold and silver through a gold IRA<\/a> or silver IRA<\/a>, giving you the same tax advantages as a conventional IRA. And you can use existing funds in your current retirement accounts to fund your precious metals IRA by rolling over or transferring assets from a 401(k), TSP, IRA or similar account.<\/p>\n

So what are you waiting for? With the Fed continuing to pump money into the financial system, the risk of accelerating inflation continues to rise all the time. Don\u2019t wait until inflation is out of control before starting to protect your investments. Call the experts at Goldco<\/a> today to learn more about how gold and silver can protect your retirement savings against rising inflation.<\/p>\n","protected":false},"excerpt":{"rendered":"

Sometimes it can be tough to be critical of the Federal Reserve. On the one hand, the Fed’s conduct of monetary policy has been incredibly damaging in so many ways. 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