Economist: Nomination of Warsh is a 'Malicious Suppression' of Gold and Silver, Hawkish Rate Hikes Difficult to Achieve

05/27 04:30

On May 27, Mark Thornton, a senior researcher at the Ludwig von Mises Institute, stated that the current U.S. market is in a historically overvalued range, with long-term low interest rates and monetary expansion driving up asset prices while exacerbating wealth distribution imbalances. Thornton pointed out that both the Buffett Indicator and the Case-Shiller valuation index are at extreme highs, with the latter only exceeding current levels once in the past 150 years. He believes that this growth, driven by credit expansion, benefits large financial institutions and asset holders, while ordinary consumers face higher inflation pressures. Discussing the nomination of the Federal Reserve Chairman, Thornton criticized the rapid decline in gold and silver prices following Kevin Warsh's nomination, calling it the 'greatest malicious suppression' of the precious metals market, and suggested that some large banks may have had prior knowledge of the news. However, he also noted that the current U.S. debt level exceeds 120% of GDP, and if significant rate hikes similar to the Volcker era were to be repeated, it would significantly raise financing costs and 'stifle the economy', making the market's expectations for a hawkish rate hike cycle difficult to realize. Additionally, Thornton warned that the escalating situation in the Middle East and disruptions in the Strait of Hormuz are continuously driving up energy and commodity prices, further strengthening market demand for physical assets like gold and silver.

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