Behind closed doors, FED Chair Jerome Powell has very different thoughts and holds quite contrasting points of view regarding how the Federal Reserve is handling monetary policy, from the ones he lets out to the media.

The difference is quite remarkable between what he had to say all the way back in 2012 and in 2014 – compared to his ACTIONS in recent years as the world’s most powerful banker.

As early as seven, and even five years ago, Jerome was warning that QE programs are NASTY to unwind. He was the one warning the board of governors that “Autopilot” tightening, where the FED sells bonds every month, or allows them to mature without rolling over – effectively shrinking the balance sheet – would cause a BOMBSHELL market reaction.

In December 2018, his dire predictions were proven to be correct. Markets tumbled by 19.2%, while investors reached pessimism levels worse than in the 2008 era.

Powell also warned that artificially-low interest rates make the rate of default for losing businesses virtually non-existent. This is a phenomenon which will come back to bite us in the ass, when economic activity heats up and investors demand higher rates on bonds, since inflation will eventually tick higher than 2%. There are quite a few companies that can’t operate with interest rates at normalized levels.

We’re not there yet, but Powell knows that down the road, lurking in the midst of well-performing enterprises, are various companies that can’t sustain their models in normal times; they survive, only thanks to the cheap cost of borrowing and of credit issuance.

Courtesy: Zerohedge.com

As you can see, the 1990s, especially the later part of them, were the BOOM YEARS for U.S. workers. Labor costs were at their highest, but the tech bubble marked the end of American prosperity for the middle class.

Under President Trump, workers are gaining traction again, after 14 years of decline.

Many have been emailing Wealth Research Group, convinced that we were too bullish on stocks, when I published this after the -20% December crash, wherein I highlighted that these STOCKS could rebound big. They ended-up as three of the best-performing stocks of 2019, which proves that contrarians will always receive flack for their decisions, initially. Since our alert, these three companies have CRUSHED the index!

On the flip side, I do want to show you an alarming chart, which shows that while we can remain at these expensive levels for stocks for another year, the EXTREMITY and SEVERITY of the valuations of U.S. stocks is at an historical inflection period.

At no other time in corporate history have the top 5 entities in the world been so valuable, compared with the rest of the economy. Investors are deeming them flawless, a common mistake which will cost them dearly:

Courtesy: Zerohedge.com

The third lie that Jerome Powell is telling investors, apart from his clear objection to QE programs, which expand the balance sheet (which he himself is implementing), and his outright disgust with artificially-low rates (which he himself is bringing back), is his warning that the FED is causing a bonds bubble that is damaging to fixed-income investors, mostly retirees.

Of course, Powell isn’t warning investors that the FED is actively embarking on this (he just talks about behind close doors), but he knows that the trade deal, the low debt burden on consumers, the trending cost of labor and the comeback of growth in China, are likely to generate a higher level of inflation than the MMT addicts believe will occur.

Gold is NOT in the $1,000s, the $1,100s, the $1,200s, the $1,300s or even the $1,400s anymore; it is NOT, as the deflationists forecasted, going to $800/ounce.

Gold is trending up, which is exactly what it should do, given that central bankers are buying quantities of it, the likes of which we haven’t seen since the 1960s.

On the 15^th, China and the U.S. – two countries, which many smart investors predicted would not reach any signed agreement, are locking arms.

This is productive for growth, adds certainty, and all but removes the threat of tariffs. The dollar trade, as a safe haven, is OVER. Gold will continue to gain in 2020.