While metals markets might be frustrating, the alternatives are even worse

In the United States, inflation, as measured by the change in the Personal Consumption Expenditures (PCE) Price Index, rose to 3.5% on an annual basis in August, up from 3.4% (revised from 3.3%) in July, according to the US Bureau of Economic Analysis on Friday. This reading was consistent with market expectations.

The annual Core PCE Price Index, the Federal Reserve’s preferred inflation gauge, climbed 3.9%, somewhat slower than the 4.3% (revised from 4.2%) increase recorded in July. The PCE Price Index and the Core PCE Price Index climbed 0.4% and 0.1%, respectively, on a monthly basis. Both of these statistics fell short of analysts’ expectations.

The survey also revealed that Personal Income and Personal Spending both increased by 0.4% on a monthly basis.

Is it better to sell the metal and keep the cash? The dollar has lost the most purchasing power in recent memory over the last three years. The worst is yet to come.

True, the Federal Reserve has remained on schedule with its tightening.

Here are some other truths that are true. The economic consequences of this tightening are yet to be determined. The Leading Economic Indicators, inverted yield curves, and a slew of other indicators all point to a recession.

Meanwhile, Congress revealed yet again its inability to cut in spending by adopting a stopgap funding bill over the weekend to avert a government shutdown. Fiscal conservatives had insisted on some spending reduction, but House Speaker Kevin McCarthy threw them under the bus in order to reach an agreement with Joe Biden and the Democrats.

The federal deficit is now measured in trillions of dollars each year, and it will only grow as the economy slows and tax receipts fall.

It is only a matter of time before the Fed becomes the buyer of last resort for federal debt once more. If the recession worsens, the foolish Congress is likely to reintroduce dollar-destroying stimulus. That makes cash anything but secure.

The equity markets appear to be in jeopardy as well. Over the last 30 days, the S&P 500 has roughly tracked the slide in gold prices. The difference is that equities have historically been overrated, whereas gold is depressingly cheap.