Hello Tim,

Inflation came in hot this week (again), putting the Federal Reserve in an impossible situation.

Rate hikes have drastically increased the cost to borrow money. Close to 20% of U.S. tax revenues are now being funneled into interest payments on our $34.6 trillion debt. In fact, interest expenses now exceed our entire defense budget.

The Fed has no choice but to start cutting rates for the sake of the governments balance sheet. The longer inflation prevents us from doing this, the more our interest expenses will climb as the government rolls over more and more bonds to cover its extreme deficit spending.

Gold serves as a hedge against monetary policy mistakes. Whatever downward pressure gold faces from rising yields is outweighed by the strain they place on the governments financial stability.

To summarize: tighter monetary policy is usually bad for gold. In this environment, it is fantastic for gold.

Typically, rising yields are bad for gold. Not this year. Rising yields represent an increasing risk of a public debt crisis, for which gold may be the only remedy.

The Fourth Turning Is Here: Neil Howe