Hey There Income Hunters,
Jerome “J-Pow” Powell’s act is really getting old.
Plus I think he’s starting to lose respect.
It’s like he’s turning into Rodney Dangerfield.
Maybe for his next FOMC Q&A he should start by saying …
“My wife and I were happy for twenty years. Then we met.”
I always chuckled at that one.
But this is no laughing matter …
Inflation numbers this week look to be anything but “transitory.”
Check out the updated Consumer Price Index (CPI) chart …
We are talking about 29-years of data and the June CPI number has blown it all away.
But guess what?
I think it will DOUBLE from here — thanks to an announcement yesterday.
Hoo Boy …
China has just announced that it will invest $400 billion in Iran over 25 years in exchange for a great deal on Iran’s oil.
It’s the latest move of absolute defiance against the US and its secondary sanctions.
What makes this especially interesting is that Iran is an OPEC member.
This is critical because as I have noted on numerous occasions — the collapse of the petrodollar agreement with OPEC could spell the end for the US dollar.
I say that, because when then-US Secretary of State Henry Kissinger went to the Saudis and offered military weapons and guaranteed protection for their oil fields and from Israel …
The Saudis had to agree to price all of their oil sales in US dollars only — and refuse all other currencies except dollars for oil.
Plus, the Saudis agreed to invest a portion of their surplus oil proceeds in US debt securities.
This was the petrodollar system of 1975 and all of OPEC agreed to the same deal.
It seems to me China’s gloves have come off and they may start speed dealing all over the world …
In the News
How about this headline from yesterday:
Biden backs the IMF proposal to issue $650 billion U.S. dollars’ worth of new “Special Drawing Rights” (SDRs) this year… Twice the total amount ever created…
Now SDR’s were looked at as a solution for a new global currency backed by multiple central banks…
The new issuance, which has the support of both Beijing and Washington, will contribute to sidelining the U.S. dollar’s role as the global reserve currency, analysts warned.
The Chinese Communist Party is expected to be a leading beneficiary.
Say what? I expected global events to go in this direction, but is our government really rolling out the red carpet for Red China?
Actually, yes.
Here’s why …
We know the Fed can’t raise rates or the everything bubble pops …
Maybe they need to shake things up and let external sources devalue the dollar for them.
Aggressive selling of dollars would accomplish the end result the Fed desires.
The Golden Cross
All this global posturing for reserve currency status is good for gold, even without the insane inflation numbers….
And now the “golden cross” has arrived.
The golden cross is a chart pattern that signals a change in sentiment from bearish to bullish …
And the SPDR Gold Trust ETF (Ticker: GLD) did have a nice move higher today on higher volume …
I would like to see another day of higher volume with GLD getting above $172.
Keep your fingers, well, crossed.
Bring It Home
You can always tell when the market is transitioning from one phase to another.
I sense that we are shifting from the accelerating growth and accelerating inflation to stagflation, which is slowing growth and accelerating inflation.
J-Pow would not agree — but the evidence is mounting.
Live and Trade With Passion My Friends,
Griff
