Craig Hemke: Silver Miners on Verge of Breakout
Tom welcomes back Craig Hemke, founder of TF Metals Report, to detail where we are at with the metals markets. He discusses Fed actions over the past few years and where their efforts will likely take us. The Fed is introducing the idea of yield curve control, which will institutionalize negative interest rates. Craig outlines the impact this control mechanism could have on the economy and gold.
Craig discusses options expirations for gold and why we tend to get selling pressure as contracts rollover.
Silver is stuck between being a monetary metal, and it’s industrial demand. He is optimistic about silver this year and thinks we could reach the mid to high thirties. If that occurs, miners will do spectacularly.
Given the precious metals markets’ size, even a small amount of institutional money entering the sector will feel dramatic.
Higher gold prices tend to lead to inflation expectations, but Craig argues that gold responds more to interest rates. Regardless, gold will look very attractive to investors in a negative return environment.
The Fed’s focus is on suppressing deflation, and therefore they are most likely okay with a commodity rally as that will promote inflation.
The dollar index doesn’t reflect the dollar’s actual value but is merely contrasted with the other major currencies. Craig doesn’t see why the Fed will be that concerned this year if we have a somewhat lower dollar.
It seems possible that the Fed will introduce a digital currency to promote further helicopter money stimulus. Today a dollar of new debt does not create a dollar of growth. He argues that nobody can afford higher interest rates, and should inflation gain traction, the Fed could rapidly run out of methods to control it.
Lastly, Craig discusses his expectations for gold, silver, and treasuries in 2021.
Time Stamp References:
0:00 – Intro
0:40 – Macro Factors to Watch
3:58 – Drivers for the Gold Price
8:27 – FOMC & Options Expiry
12:40 – Staying On The Gold Bull
18:23 – PM’s & Institutions
21:48 – Gold & The Fed
25:34 – Valuing the Dollar
27:12 – Keynesian Experiments
29:50 – Inflation & Interest Rates
32:25 – Forecasting 2021
35:38 – Wrap Up
Talking Points From This Episode
- Fed’s Yield Curve Controls
- Silver Predictions in 2021
- Commodities and Inflation
- Stimulus and Negative Interest Rates
Craig Hemke, aka “Turd Ferguson,” was a licensed securities “professional” for nearly twenty years. Disgruntled by the fraud known as “financial services,” he retired to a career as a serial entrepreneur in 2008. Though otherworldly in his ability to forecast price movements, Craig is not a soothsayer, a psychic, or a witch. After all these years, he simply has a decent understanding of the forces at play in the precious metal “markets.”