A Fatally Cornered Fed vs. Historically Honest Gold

By Matthew Piepenburg

Partner

November 21, 2023

Matterhorn Asset Management, AG partner, Matthew Piepenburg, sits down with David Lin of the David Lin Report to help end a number of false debates and narratives currently making the headlines.

Piepenburg begins by squarely addressing the so-called GDP “surge” in the U.S. as little more than a deficit-spending contradiction, as more debt-based “growth” is not genuine growth, but, well…just more debt. Piepenburg describes the trio of rising yields, rising GDP and rising deficits in the US as little more than the profile of an EM nation rather than a leading developed economy. He further explains how rising yields/rates just add more pressure to an already over-burdened consumer’s debt costs as the invisible tax of grossly under-reported inflation pours salt on the wound.

Turning to bonds, Piepenburg warns against the so-called lure of bond “value” and rising yields. He argues that stress in the bond market is far from over. The only way to support/lift sovereign bond prices and hence compress yields would and will require more magical Fed money, which means even a “saved” or rising bond market will be superficial, as such gains will be eaten away by debased money and rising inflation and negative real rates. In short: No easy way out of the Fed’s debt spiral. It’s either save the bonds or kill the currency, and the direction ahead, he argues, is historically clear.

With the Fed (Powell) supporting higher rates while the Treasury Dept (Yellen) grossly expands public debt, the net and comical result is more debt at higher cost/rates, all of which will require more inflationary liquidity to pay. Alas: Powell’s war/policy against inflation will end in more inflation.

Piepenburg also addresses what he describes as the false debate over hard vs. soft landings when the evidence of a hard landing is literally and abundantly right before our eyes. The conversation then turns to the reality rather than hype of de-dollarization, the questioned performance of gold vs. equities or other assets in an inflationary setting and the ultimate role of precious metals in far-sighted portfolios.