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Adrian Day: The Fed Is Out of Control and That’s Bullish for Gold

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Adrian Day did an interview with Kitco News and said gold will finish the year over $2,000 an ounce and investors shouldn’t worry about short-term profit-taking and consolidation. Why? Because the Federal Reserve is out of control.

Day is the CEO of Adrian Day Asset Management and also works with Peter Schiff as the portfolio manager of EuroPacific’s gold fund.

I definitely think we can see new highs before the end of the year, absolutely. And stay over $2,000. “

Day said the key is the Federal Reserve  – it’s actions not its words. They will often talk about rolling things back and normalizing policy. But the reality of the pull-back is always very minor.

They simply cannot pull back for one reason or another. Sometimes it’s just because the market gets a hissy-fit. Remember the end of 2018? Seems so quaint right now, doesn’t it? So long ago. But the Fed started to raise rates. They had already stopped increasing the balance sheet. They started to increase rates and the stock market had a hissy-fit, and they immediately reversed. Any excuse or reason, however you care to put it. I care to say excuse. But any reason, whether it’s Brexit, or whether it’s the stock market, or whether it’s whatever, it doesn’t matter.  There’s that expression when you’re a hammer, everything looks like a nail — and that’s the way it is with the Fed.”

Day emphasized a key point that we’ve made over and over — the Fed was engaged in extraordinary monetary policy before the pandemic.

So, corona didn’t cause this explosion. Something would have happened sooner or later to cause this.”

And Day said he believes we’ve reached a point of no return.

“The fed is out of control.  Jerome Powell himself has said there are no limits. There are no red lines. Jerome Powell has said we are not even thinking about thinking about raising rates.”

Powell has also said he doesn’t think the Federal Reserve will ever shrink its balance sheet. It will simply let the economy grow into it. So, the Fed isn’t even considering tightening.

It can’t do it. It’s just a matter of expanding, halting, expanding, halting.  And that is about the most positive environment for gold that you can possibly think of.”

Meanwhile, the government continues to spend money at a staggering pace, running record deficits.

The government, whether its the administration or Congress, is spending money out of thin air. Ther is not even the slightest pretense that we’re going to pay for it. No one is even talking about that. At least in the past, people said, ‘Well, we’ll have a deficit now but we’ll pay for it later,’ or, ‘We’ll have to raise rates to pay for this.’ They’re just spending and the Fed is creating the money to go along with it.”

The question is will the government stop spending money on stimulus? Is the Fed going to stop printing money to monetize the debt?

Of course not. The Fed is going to continue to create the money. And whether it’s unemployment benefits, whether it’s a new works program, or infrastructure program or whatever, the Fed is simply going to create the money without even a pip of objection. We know that. So, this is incredibly bullish for gold.”

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