Steven Van Metre: QE Bombs And Gold Price Crashing
Tom welcomes Steven Van Metre to the show. Steven is a macro money manager and financial planner.
Steve studies the Fed and their policies carefully. His macro thesis is that a complete replay of the great financial crisis is coming only this time it will be much worse.
The majority view is that QE is inflationary, but he disagrees with this position. Banks are currently buying bonds, and as a result, the dollar is going to have to rise. We should also see savings rates start to fall, which will bring back dollar demand as newly created debt will need to be repaid.
The Fed has been creating dollars for the banks but holding them in reserve. The commercial banks don’t have access to that money, so he argues that the Fed isn’t currently injecting liquidity.
The Fed’s goal with QE is to reduce the amount of treasuries on the market. Money velocity crashed in the second quarter, and he doesn’t expect a big surge any time soon. QE’s goal is to reduce the treasury supply, which will cause lower interest rates and higher bond prices. We are within weeks of the 30-year moving lower, and then the Fed will have to react.
The coming short-term strength in the dollar is going to lead to a pullback in gold as real yields rise. Steve believes this will be a great buying opportunity for precious metals.
“The last leg of this stool is the dollar and if we see the dollar rally from here than your going to see a replay of the last financial crisis only it’s going to be much much worse… last time we didn’t go into that crisis with 30 million unemployed.”
Time Stamp References:
1:20 – Steve’s macro thesis.
3:45 – 30-year short position
5:05 – Why the dollar could rise.
10:05 – Why the Fed is not creating liquidity.
14:15 – Money velocity direction
17:10 – Consumer prices and dollar movement.
18:40 – When will QE return.
20:20 – The trifecta of tightening.
21:55 – Dollar strength will result in a gold pullback.
25:20 – Gold pullback and last buying opportunity.
26:30 – GDX, GDXJ and possible lower resistance points.
29:55 – QE and what it does.
Talking Points From This Episode:
• His contrarian macro thesis.
• Fed isn’t injecting liquidity.
• Dollar will rally as interest rates drop.
• Another financial crisis is coming.
Steven Van Metre is a Certified Financial Planner™ Professional and an Investment Advisory Representative with the registered firm Atlas Financial Advisors, Inc. He is also financial planner and portfolio manager of President of Steven Van Metre Financial, which specializes in retirement income strategies and the direct management of client assets.
Steven designed a planning process to help clients understand, prepare, and become active participants in creating their retirement plan. His method helps people understand what their retirement will look like, and what they need to do to make their retirement goals come true. Over the past 15 years, Steven has coached many people through to an entirely successful retirement.
His approach utilizes a sophisticated income planning spreadsheet that considers the client’s current age, retirement age, future sources of income, inflation, and simulations under various historical stock market conditions. The ultimate goal is to provide peace of mind before and after retirement.
Steven created and actively manages several risked based asset allocation portfolios. He uses a strategic asset allocation philosophy with a tactical focus to pick funds weighted towards the economy’s expected growth sectors. These portfolios are regularly rebalanced to ensure optimal sector position. Investors in these portfolios can expect long term returns consistent with their risk tolerance.
In addition to managing portfolios, Steven is one of the top annuity agents in the U.S. His approach to utilize annuities as part of income planning helps clients find the right annuities with the highest contractual guarantees to lock-in retirement income for life. This approach allows clients to invest the balance of their retirement savings in the market with less worry about market fluctuations than others who are fully invested in the stock market throughout retirement.
Steven teaches an adult education course on retirement planning for the Levan Institute for Lifelong Learning at Bakersfield College. Offered twice a year, attendees come away with a greater understanding of how to plan for retirement and make their investments last a lifetime.
Steven is sought by peers for advice and conducts webinars to educate other advisors on annuities and real-world expectations from them. He regularly follows a variety of economists to keep pace with changes in the marketplace. His insightful advice has been featured in print and on local radio and television.
A resident of Bakersfield for over 25 years, Steven graduated from National University with B.A. in Business Administration. He earned the Highest Award for Achievement from the Dale Carnegie Course.