I have had many people asking “How could the markets be going up when the economy is dead and there are riots all over the place with mass destruction taking place? This is a great question especially since our prior economy (just a couple of months ago) was based upon consumption- about 70% of our economic activity was derived from sales and services.
Currently, most of the country is still shut down as many are eager to get back to work. That may be stalled a bit as massive destruction has taken place in many major cities. My daughter, who has thankfully been working from our home in Pennsylvania, was notified that her company’s flagship store in NYC was destroyed by looters a few days ago. As a matter of fact, it was in the NY Post as the looters didn’t get a lot of items but did manage to make the store uninhabitable for the foreseeable future. The estimated timeline for her company to get back to works is “We’ll let you know when we know”.
Day after day on the financial game shows they trot out idea after idea whether it be “China Trade talks going well again” or “Vaccine may be right around the corner” or whatever the story du jour is.
The fact of the matter is that all of this is a bunch of nonsense to keep people’s eyes off of what is happening. The Fed is “Printing and Buying” everything. The reason given is to “bail out” companies, individuals, cities, states and nations. My belief is that this is not benevolent at all, will save few, if any jobs and will allow the Fed to basically own the country.
Many states and cities were flirting with bankruptcy LONG before any of this stuff happened. The virus and now the riots are just speeding up the timeline. Again, more debt to pretend that we are able to service existing debt is a recipe for disaster. States cannot conjure up their own cash like the Fed.
In 2008, the Fed “bailed out” mortgage holders. They are now the largest owner of real estate in the USA.
Currently, the only thing they are not admitting to buying is stocks. While they would need Congressional approval in order to do so, which they have not requested or received, I believe they are buying anyway based upon unusually large purchases at times when sell targets would be hit by the algorithms. Not too many entities could be making these types of trades in this size to move the markets as we have seen time and time again. Other central banks, like the Bank of Japan, Swiss National Bank and many others are not much more than large hedge funds at this point, buying virtually everything including stocks, along with the sovereign wealth funds.
So, the Fed is put out there as this benevolent entity that will save us all when in reality they will OWN us all and likely be calling all of the shots going forward. Let’s not forget their original mandate was to keep a strong dollar. The dollar has lost 97% of its value since the Fed’s inception and most of those losses have happened since 1971 with the pace really getting going around the year 2000.
This is being allowed to happen as our so-called “leaders” do nothing to help US.
Just think of how evil this is:
* Dare to go to work in most states and you could be arrested or, if you have a license to practice a skill have it revoked because you are not compliant. At the same time Pa governor (I use that term loosely!) is out with a huge crowd- not staying 6 feet apart and only wearing a mask when he thought he was being watched. There are photos WITHOUT the mask.
- Criminals are set free so they don’t get the virus. Law-abiding citizens are arrested for daring to try and feed their families.
- In NY, because of a new bail law virtually all of the arrested looters are set free the NEXT day.
- Police are told to do NOTHING while destruction of property and livelihoods are destroyed.
- Riots across the country have rioters presenting the same printed-up signs and plenty of bricks left in strategic areas.
- In Italy yesterday “Orange Vests” came out, threw away their masks and called the virus a HOAX. While we all realize the virus is real the draconian measures taken were likely totally uncalled for as even the CDC has come out and said it is nowhere near as deadly as previously thought- by orders of magnitude.
- Even though there is a load of new information that the economic damage will cause FAR more deaths than the virus the politicians seem to be enjoying their power trip as they send their local, state and national economies down the drain.
In the meantime, the faux cash from the Fed also allows the banks to keep the price of gold and silver in check (by conjuring up paper contracts out of nowhere and selling into the “markets” generally when few buyers are there and knocking the price lower. This goes on and on and I believe will one day colossally fail. Actually, the games they are playing today and the amounts involved may have moved the price down $100.00 per ounce where today it may knock it down $10-$15.00 and the recoveries have been swift lately. In the meantime, central banks, banks and billionaires are buying at a record pace.
It is also telling that if you want to get physical gold or silver you will pay a large premium over the fake paper price and wait weeks or months for delivery. Even so, I believe that metals at anywhere near these prices appear to be a bargain.
I have also had people asking me “Shouldn’t we buy stocks because the Fed is buying?”
My answer is that while the “markets” may rise for a while the plug could be pulled at any time. I would much rather buy the metals, which are being artificially depressed and could move violently to the upside at any time rather than having to worry about an asset that is being artificially propped up and could fall hard at any time.
While many may be waiting for another major event to put an end to this madness I believe the gravity of our situation is hidden from most. I don’t think it will last much longer.
When government checks stop (unlikely in my opinion) it could lead to riots that are far more destructive than what we have already seen. Or if the checks continue and buy a weeks worth of provisions that have to last a month (more likely in my opinion) you may get the same results.
In any case, what is the real worth of a stock or bond that is being artificially propped up with money conjured up from nowhere with a computer click? It is likely we will find out soon enough. What will the value of real estate be when rents don’t get paid and that leads to mortgages and taxes not getting paid and many new listings start showing up while banks make it harder to get loans?
What is the price of gold when the dollar gets debased by conjuring up trillions to pretend that we can pay our bills? It’s been going on for over 10 years and the numbers are getting astronomical.
According to the USDebtclock.org there are over $26,000.00 for each ounce of gold in the USA. It was only a few weeks ago that the number was $25,000.00. Even more astounding is silver where there are $3162.00 for every ounce of silver. Keep in mind that silver traded for $50.00 per ounce in 1980 and again in 2011. After all of this “printing” it now sits at $17.75 on 6-4-2020. What sense does that make?
In my opinion -NONE! Possibly the most under priced asset on the planet.
Things are changing at light speed.
Financial Advisor, Raymond James Financial Services, Inc.
2642 Route 940
Pocono Summit, Pa 18346
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