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Markets are ignoring the new inflation reality


Blain’s Morning Porridge/Bill Blain

Repost from 7-26-2021

 

“It’s already embedded in financial assets – sequestered in the rising prices of bonds and global equity. (Going to give myself and extra point for using sequestered without talking about Co2, darn.. just lost it..) That trapped inflation is now leaking into the real economy – just like a leaking barrel of toxic sludge dumped in a river. The mechanism is simple: investors holding financial assets are increasingly distrustful of valuations (which are impossibly high due to repressed interest rates), so they are switching from financial assets to real assets – like private equity and debt, property, and outright ownership of real assets.”

USAGOLD note: Though we do not doubt leakage is occurring, it is at the moment a very slow process, as implied in the headline atop this post. As a result, there is still untapped potential in some underpriced assets – most notably gold and silver. Blain’s latest is a good read at the link……

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