Yesterday the Federal Reserve released an FOMC edict and chairman Jerome Powell held a press conference. The gist of it is that the Federal Reserve said it does not conceive of raising interest rates now until at least 2023 and expressed a desire to force the rate of inflation up above 2% for “some time.” This is a historic announcement that is the polar opposite of what happened in 1980 when the Federal Reserve Chairman back then declared a desire to destroy inflation and raise rates as high as it took to do it.
That successful campaign by Paul Volcker did lead to a bear market in stocks, but when it ran its course it set the stage for a bond bull market that finally has reached its apogee. Now we are in a historic turning point that will eventually be defined by inflation. Everyone expected an announcement like this to come from the Fed Wednesday and that’s why the stock market rallied into it. But as I talked about Monday in a video for you that rally could be a mere bounce as it came after a fast drop led by big tech leaders down to the 50-day moving averages of the S&P 500 and the Nasdaq. We’ll see what happens and I don’t think the market is going to crash or anything. As Ike Iossif noted his money flow indicators for the markets have done something they have never done before in the past few months.
Why does the Fed says it want’s inflation? Here is one thought I saw.
Fed statement AND Powell RIDDLED with inconsistencies— Danielle DiMartino Booth (@DiMartinoBooth) September 16, 2020
*Unemployment rate forecast DOWN
*GDP forecast also DOWN
*As for that AVERAGE inflation target they’re going to allow to run hot, it’s not projected to hit 2% for YEARS
All the Fed wants is stimulus spending to do more QE. https://t.co/ZQzpuE1egJ
Whatever the Fed’s motivation and no matter how the stock market gyrates today, the things that will benefit the most going forward are simply going to be gold, silver, and the mining stocks. This why they have already been beating the market all year. It’s why we saw big cap mining stock AEM jump to a new high already this week on Monday. And it’s why small cap mining stocks are going to continue to be red hot plays for me going forward.
Take a look at Aftermath Silver (OTCMKTS: AAGFF), because it has a nice entry point now and some good news this week.
I have been owning a position in Aftermath Silver now for more than a year. It went on a big surge in July when it announced that it was engaging in a series of additional silver property acquisitions that would turn it into a leading silver exploration stock.
Yesterday morning it announced an updated resources estimate for its Cachinal project showing 16.32 million indicated ounces of silver. This news came after mining legend and billionaire Eric Sprott bought more shares in a private placement to increase his stake to a 19.3% ownership position in the entire company.
Disclosure: Mike Swanson owns shares of Aftermath Silver. Because it is a small cap stock with a market cap of less than $100 million he has put himself in a trading blackout on the stock and will not buy or sell a share of it for at least 30-days from the date of this post.