In this week’s Money Metals Midweek Memo, host Mike Maharrey examines the post-election economic landscape following Donald Trump’s victory. He discusses how the financial markets have responded, the persistence of inflation, and the challenges of monetary policy. Maharrey also underscores the importance of precious metals as a hedge against economic instability, offering insights into what lies ahead. Market Reactions to Trump’s ElectionFinancial markets reacted significantly to the election results. Stock markets experienced rallies as investors anticipated pro-business policies, including tax cuts and economic stimulus. The U.S. dollar surged, reflecting optimism about economic growth, while a bond selloff drove treasury yields higher. Precious metals, including gold and silver, initially saw sharp declines—a typical response under Republican administrations—but have since rebounded as inflation concerns remain at the top of mind.
Inflation: A Persistent ChallengeMaharrey highlighted inflation as a continuing issue that has far-reaching economic implications. Core inflation increased by 0.3% month-on-month, translating to an annualized rate of 3.6%, well above the Federal Reserve’s target of 2%. Since the COVID era, the dollar’s purchasing power has plummeted by over 20%, compounding the challenges for American consumers. Maharrey reiterated economist Milton Friedman’s assertion that inflation is driven by money printing, not economic activity.
Federal Reserve’s Policy ResponseThe Federal Reserve has adopted a cautious approach, recently cutting interest rates to 4.5–4.75%. While this is higher than the near-zero rates of the post-2008 financial crisis, it remains moderate by historical standards. Maharrey criticized the Fed for maintaining historically loose monetary conditions, noting that their policies have not effectively addressed inflation. Federal Reserve Chair Jerome Powell emphasized a data-dependent approach, leaving the door open for adjustments based on future economic conditions.
Structural Economic IssuesMaharrey warned that many of the economy’s structural problems are beyond the control of any president, including Trump. The U.S. paid over $1 trillion in interest on its national debt in fiscal 2024, highlighting the unsustainability of current fiscal policies. Federal spending surged 24% year-over-year in October 2024, driven by entitlements such as Social Security, Medicare, and National Defense. With only 27% of the federal budget classified as discretionary, significant spending cuts are difficult to achieve without addressing politically sensitive programs.
Precious Metals: A Timeless HedgeAmid ongoing inflation and structural challenges, Maharrey emphasized the value of precious metals as a hedge against economic uncertainty. The Silver Institute projects industrial demand for silver to reach 1.21 billion ounces in 2024, leading to a fourth consecutive annual supply deficit. Maharrey also reaffirmed gold’s historical role as a hedge against inflation, describing the current price dips as an excellent buying opportunity for long-term investors.
Managing ExpectationsMaharrey urged listeners to temper their expectations for what any president can achieve, emphasizing that decades of poor fiscal and monetary policy have created systemic issues that no single administration can resolve. While Trump’s presidency may slow the growth of government spending, excessive debt, persistent deficits, and entrenched inflation remain formidable challenges.For those seeking to protect their wealth, Maharrey recommended investing in precious metals through Money Metals Exchange, noting the company’s resources and customer support. Learn MoreTo stay informed about economic trends and precious metals, subscribe to the Midweek Memo and Money Metals’ Market Podcast. Visit MoneyMetals.com to explore investment opportunities and access valuable resources.More By This Author:UAE Poised To Help Usher In “Asian Century” For Gold
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