Combine this, with a $2 trillion fiscal package — that comes with cash drops to the American public and small businesses, and will likely come with the U.S government supplying cash to major corporations (namely airlines) for exchange for equity stakes — and you have: 1) the government explicitly involved in propping up the stock market, and 2) a brew for massive inflation when we come out on the other side of the virus. 

As we’ve discussed, historical turning points for stocks tend to come with some form of intervention.  With the approval by Congress of this relief/stimulus package, this will be the motherload of all interventions. 

On that note, here’s an excerpt from my note last week:  “As the world’s central banks are printing money and governments are rolling out massive deficit spending programs, gold should be moving higher like a rocketship.  Yet it’s down 13% since last Monday.  Let’s keep in mind that the Fed has the printing press, and won’t lose the battle in the bond market.  In the very near future, the Fed will probably have the 10-year yield where they want it (maybe at 30-40 basis points), and be in complete control of the yield curve.   It may take that observation to turn around the price of gold.  When it does, we could see gold much, much higher (maybe $2,500ish).”