The collapse of the US economy is only a matter of time, with fundamentals favoring gold and silver prices

foreign exchange trading platform- Gold's fall to Friday's low of $2,301 from $2,341 earlier in the week is evidence that mainstream investors are in trouble, market analyst Mike Maharrey said. He warned that it was only a matter of time before the U.S. economy collapsed. But he believes that regardless of how many points Federal Reserve officials put on the chart, fundamentals are currently supportive for gold and silver.

The big news this week is the release of a new set of dot plots predicting the direction of interest rate policy, which are very different from a few months ago. Just a few months ago, the FOMC was convinced that three rate cuts were the appropriate trajectory for monetary policy, but how much has changed in two and a half months.

The FOMC now forecasts only one rate cut this year.

Mike pointed out that the mainstream market consensus is to sell gold and silver whenever there is hawkish talk from the likes of Powell, or good economic data indicates that the economy is still growing. "This is because people mistakenly think that a strong economy will cause inflation," he explained. "It's not. Money creation causes price inflation."

When the Federal Reserve turns dovish or U.S. Consumer Price Index (CPI) data indicates that price inflation may be cooling, mainstream investors buy gold and silver, raising hopes of a rate cut.

This week, the market received two important news, with the Federal Reserve taking a hawkish stance, but the May CPI report showed that price inflation was falling.

"This seems to be putting mainstream investors in a bind," Mike stressed.

Gold and silver prices reflected this, fluctuating back and forth, with little change on Wednesday.

Gold and silver prices slumped on Thursday, sending the metal down about $15 an ounce, before news that producer prices rose much less than expected in May restrained the sell-off.

"It's best not to make knee-jerk moves just because of the latest developments on social platforms, but to think wisely about the potential dynamics," Mike cautioned.

He mentioned that the reality is that the Federal Reserve is in a dilemma, and the central bank has not done enough to contain price increases.

But the Fed has "tightened enough" monetary policy to break out of a debt-ridden, frothy economy that has triggered a financial crisis that is still underway.

"The world is still mired in debt. Governments continue to borrow and spend, and there are still all kinds of misinvestments in the economy," he said.

"It is only a matter of time before the economy collapses and markets get the rate cuts they desperately want, even as inflation continues."

"Of course, that means prices will go up further."

He concluded by saying that regardless of how many points Federal Reserve officials put on the chart, current fundamentals are supportive for gold and silver.