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The Fed will press ‘panic button’ by Thanksgiving, pivot monetary policy – Frank Holmes

Kitco News

On Wednesday, President Joe Biden announced new programs to tackle climate change, including $2.3 billion to help communities retrofit buildings and expand flood controls. Indeed, governments and corporations across the world are adopting ESG (Environmental Social Governance) policies to deal with climate change concerns.

However, the “emotional” reaction to climate change has weakened economic growth and caused inflation, said Frank Holmes, CEO of U.S. Global Investors and Executive Chairman of HIVE Blockchain.

“Climate change is basically embedding inflation,” said Holmes. “A lot of [inflation] has to do with energy inflation in Europe, with a panic shutdown of nuclear power in Spain and Germany, and with taxation on cars and trucks.”

Holmes, who correctly predicted a market boom in 2020, is now forecasting that by Thanksgiving, the Federal Reserve will reverse course on its monetary tightening and reduce interest rates.

He spoke with David Lin, Anchor and Producer at Kitco News.

ESG and Climate Change

Holmes suggested that ill-conceived ESG policies cause supply shortages and more money printing, as governments seek capital for green energy schemes. This, in turn, leads to inflation.

Using Sri Lanka’s recent political upheaval as an example, he said, “They forced organic food everywhere in Sri Lanka, and they got a 20 to 30 percent drop in production. Inflation went through the roof, and there are already huge riots in the streets.”

Last April, Sri Lanka’s government banned synthetic fertilizers and pesticides, and ordered the country’s 2 million farmers to go organic. Domestic rice production fell by 20 percent, and the price of rice rose by 50 percent.

Holmes added that markets are sensitive to Fed interest rate hikes because of climate regulations.

“Climate change regulations are not synchronized,” he said. “They’re just panic buttons being pushed everywhere… These regulations are suffocating around the world.”

A Fed pivot?

There have been worldwide protests over higher prices and cost-of-living concerns. Holmes said that civil unrest could trigger the Fed to reduce interest rates.

“All we have to do is get a big protest like they’re having in Europe… there’s a trend that’s going on in countries around the world,” he explained.

He predicted that “by Thanksgiving,” the Federal Reserve would push the “panic button,” and loosen its monetary policy.

Holmes tracks the Producers’ Manufacturing Index (PMI), which he argued is a leading indicator of overall economic health.

“The PMI is shrinking globally,” he said. “If the world [economy] all of a sudden starts contracting, panic buttons will set off and there will be a spigot open of more money printing.”

To find out Holmes’s outlook for gold, watch the above video.

Follow David Lin on Twitter: @davidlin_TV (

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