On 18-April-2017, we discussed the primary components of the precious metals market (gold, silver, platinum & palladium). The macro picture was fairly clear to us at that time. Gold and silver experienced strong rallies following the election. Precious metals enthusiasts and those fearing an acceleration in price inflation were taking long positions. The argument for more price inflation was relatively straightforward. The new administration's fiscal plan could increase the deficit if revenue derived from other sources such as the border tax and repatriated capital tax did not make up for the cut in individual and corporate income tax rates. With more efficient permitting, reduced regulation and lower corporate taxes would entice corporations to locate production in the US would improve employment and tax collections, but this would take some time, maybe even years to manifest. The other side of the fiscal coin was spending. The President intends to spend $1 trillion over the next 10 years on infrastructure. How this would be paid for is still an open question, and one figure that has not been part of the debate is what is the incremental spend? The Federal and State governments already have big budgets for infrastructure spending, so we do not know the differential.
