It appears that whatever 2020 may hold for all of us, it does not appear it will be uneventful.
A little over a week into the new decade and already we have assassinations and bombings in the Middle East, hundreds of billions of dollars being deployed to keep the banking system functioning on a daily basis, civil unrest across the globe (mainly because of the inequality that the financial interference causes- the rich get richer, the poor get poorer and the middle class gets wiped out), and a rising stock market while all the economic fundamentals show a weakening economy, weakening companies and the largest debt load the world has ever seen. Of course, without that debt load the economy would have already shown its true weakness. ONLY the massive piling on of new debt to finance ongoing operations and pay interest on existing debt has lulled the population to sleep about our precarious situation. This is true of people, companies, municipalities, states and most of all the Federal government.
It is obvious that if the Fed didn’t step in with hundreds of billions (maybe trillions- who really knows?) that 20% pullback in December of 2018 may have looked like a walk in the park. Since they did step in- just like they did in 2008 and many times since, true price discovery is put off until yet another time. In other words, the cliff is still on the horizon, but the altitude just got higher again. This just means on the day of reckoning those assets being artificially propped up will fall just that much farther.
Keep in mind those assets being artificially suppressed will vault just that much higher also.
I have written many times about how many will be stunned when they see how far these assets might move. An example that I have spoken about is that the precious metals- gold, silver, platinum and palladium are all traded on paper markets and those paper markets are used to hold the price down by selling paper proxies into the market (almost always when trading is at its thinnest and with a market order no less) to keep the price suppressed. One precious metal that does NOT have the paper market dictating price is Rhodium. Rhodium is trading at nearly $8000.00 per ounce while I am writing this. Its 52 week low was around $2400.00. This makes sense to me since all of the “money” that has been conjured up out of nowhere globally is at truly insane levels but most assets are not revealing what they normally would because any assets deemed important are either propped up (stocks, bonds, real estate) or suppressed (metals, etc. to hide the debasement of our currency). Without the manipulation I believe we are getting a front-row seat to watching our currencies being created into oblivion. As I write this Rhodium is up over $1200.00 per ounce just this week.
Remember, it is not the asset that changes BUT the dollar or currency measuring it.
While many here in the USA are oblivious to what is happening globally the price of many metals are at all time highs in many currencies already. The most extreme example I can think of right now is in Venezuela where you need tens of millions of bolivars (their version of the dollar) for a cup of coffee. In the meantime, an ounce of silver (not even gold) pays for a family of 4 to eat for over a month. Let that sink in as we watch our “leaders” put us all on the hook for hundreds of trillions of dollars, yen, yuan, euros, etc. while we are all earning and spending hundreds and thousands. This is truly beyond belief!
I was watching a Youtube video with Robert Kiyosaki of Rich Dad/ Poor Dad fame where he asked a question that touched me deeply. The question was this: Why would you work for something that is being printed up and debased day by day? It really struck a chord for me as I have told many people while we are out here trying to help others and make a living there is someone hitting a button and getting all the “money” they need to get any outcome they want or to buy any asset they want to own- making our labor virtually worthless. It also distorts virtually all prices and does not allow for true price discovery leading to bubbles, booms and busts. I believe our third bust in 20 years is near. We’ll see!
I have seen a major change in my own thinking because I was always sure if I had a certain amount of dollars, I would be ok. After seeing what is happening to currencies globally I am not as comfortable as I used to be and have found myself wanting to be far more diversified and not count on interest or dividends- there may or may not be any to collect- but to be able to be more self-sufficient and to have hard assets to be able to overcome any interruptions that may come our way when this system is exposed for what it is- which is basically, in my opinion, a ponzi-scheme at this point.
I believe we have to plan for what we have today (Dollars and paper assets) but also be prepared for a large devaluation of those assets because of the antics of the central banks and governments around the world. It may happen last here in the USA (or maybe not) but I can assure you that economic laws apply EVERYWHERE- not just in backward economies. What we are seeing globally is a “print-fest” to buy real assets with “money” from nowhere. Those that had the weakest currencies have already seen their currencies virtually destroyed.
It is truly sad that we are seeing what happens when you try to “print” your way to prosperity or even just try to maintain the illusion of normalcy or solvency by creating “money” to fill in what the economy cannot carry. This leads to kicking the can down the road but makes the adjustment at the end that much worse for all involved. Ask those in Venezuela, Argentina, Brazil, Turkey, and other places already suffering this fate.
The sad part with all of this is that we have hundreds of historical examples of what happens once central banks and governments go down this path. There is not ONE instance of success in history- unless you count those extreme few on the top who get real assets for basically nothing- and sticking us with the bill on top of it!
Anyone who has not given at least a bit of thought as to what may happen in the next few months or years I believe may be in for a rude awakening. A little planning may go a long way towards making your life easier to manage if the signs currently exposing themselves like REPO, QE4, QE globally, negative interest rates, etc. are finally recognized by the masses.
Also keep in mind that in the “greatest economy of all time” it is HIGHLY unlikely that icons like Macy’s would be closing one in every eight stores it has. Pier One Imports is also closing most of its stores. Bed Bath and Beyond is closing stores. All manufacturing numbers are cratering as well as shipping.
The unemployment numbers and inflation numbers are massaged so thoroughly that they bear no resemblance to the reality we are all living.
On top of all of that our debts are growing at an ever-increasing pace in every level of society. What would our GDP be without the use of debt to continue government transfer payments? I believe the numbers would shock everyone.
You sure about this “greatest economy of all time” thing?
It appears to me to be nothing but propaganda to keep us all in the dark for as long as they can.
It’s time to shine the light and — Be Prepared!
Any opinions are those of Mike Savage and not necessarily those of RJFS or Raymond James. Expressions of opinions are as of this date and are subject to change without notice. The information in this report does not purport to be a complete description of securities, markets or developments referred to in this material. The information has been obtained from sources deemed to be reliable but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Commodities are generally considered speculative because of the significant potential for investment loss. Commodities are volatile investments and should only be a small part of a diversified portfolio. There may be sharp price fluctuations even during periods when prices are overall rising. Precious metals, including gold are subject to special risks including but not limited to: price may be subject to wide fluctuation, the market is relatively limited, the sources are concentrated in countries that have the potential for instability and the market is unregulated.
Diversification does not ensure gains nor protect against loss. Companies mentioned are being provided for information purposes only and is not a complete description, nor is it a recommendation. Investing involves risk regardless of strategy. If you no longer wish to receive this correspondence please reply to this e-mail.