IN THIS ISSUE:

1. Gold Prices Soar to Record High – The Question is Why?

2. Is Bull Market in Gold Signaling Much Higher Inflation?

3. Unemployment Fraud Rampant Due to $600/Wk. Bonus

Overview

Friends and colleagues increasingly ask me what I think about gold’s rise to new record highs this summer. And the follow-up question almost always is: Does gold’s surge mean inflation is about to spike? I will address both of those questions today.

There are numerous factors which can cause the price of gold to rise significantly, but I don’t believe inflation fears are the main driver behind gold’s recent surge. I believe it has much more to do with uncertainty and fears surrounding the COVID-19 pandemic. But I’m getting ahead of myself.

Following that discussion, we’ll look into the rampant increase in fraud and abuse within the government’s unemployment insurance program – which among other things, offered unemployed workers $600 per week in bonus payments. As I’ve discussed previously, these weekly payments meant that over two-thirds of the unemployed were making more to stay at home than to go back to work.

While the $600/wk. payments stopped at the end of July, the House of Representatives has already passed a massive new stimulus bill which extends those payments through next January. It remains to be seen what the Senate counters with, but I think it’s safe to assume weekly bonus payments of at least $400-$500 (if not $600) will resume very shortly. This is not good for the economy long-term.