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Matthew Piepenburg: End Game is Inflationary, Gold Will Get the Last Laugh

Matthew Piepenburg, partner at Von Greyerz, shared his expectations for the US Federal Reserve, interest rates and inflation in 2024, also explaining how he sees gold performing against a tumultuous economic backdrop.

Although the Fed hasn’t cut rates yet, Piepenburg said it’s clear the central bank will throw in the towel before reaching its 2 percent inflation target. In his view, that’s because the US government can’t afford higher-for-longer rates.

‘Cuts are probably coming. That will be good for gold, that will certainly be good for the S&P 500 (INDEXSP:.INX) — that will be good to stave off in the short term a recession,’ he said. However, the US dollar will weaken.

‘Every broke country, every broke regime has to weaken its currency to save its system, and in this case the system is the bond market,’ Piepenburg explained. ‘The bond market will be ‘saved’ (and) the S&P will be saved at the expense of the inherent purchasing power of the US dollar. And that will be the same across other countries as well.’

He went on to note that raising rates quickly like the Fed has done is of course disinflationary. However, looking longer term he sees inflation rearing its head once the Fed is forced to monetize US debt with ‘money from nowhere.’

‘The end game is inflationary. The pause right now is disinflationary because we just raised rates by 5.75 percent — of course it’s disinflationary. It knee-capped the middle class, it knee-capped the bond market, it knee-capped the S&P in 2022, it knee-capped just about everything but the US dollar,’ Piepenburg emphasized.

‘But again — this is my thesis, if I’m wrong, I’m wrong … the end game, which no one can determine the date or the month or the quarter, is destruction or debasement of the currency to save the system. And they will blame that destruction of the currency on global warming, on Putin, on Martians, on COVID — whatever they want,’ he said. ‘But the real cause, as I’ve said over and over, is the politicians and central bankers who try to extend and pretend every bubble by creating a new bubble by manipulating interest rates and money supply.’

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

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