Since I was a little boy, I always considered that those with wealth were the ones with all of the money.
Today, I have a much different idea of who is truly wealthy. I got my first taste that “money” is not wealth when I watched from afar as Zimbabwe imploded and fell into hyperinflation.
It was every kid’s dream to be a millionaire when I was growing up. Today, many admire billionaires because today you need billions to be like the millionaires of a century ago. Actually, you need tens of millions to live like those that had a million dollars just a couple of decades ago.
How does it feel to be a billionaire? I guess it depends upon where you live because everyone in Zimbabwe is, or was, a billionaire. To many, that may sound like it is the most affluent area on the planet until one realizes that it cost a trillion Zimbabwe dollars for a dozen eggs a few years ago.
Today’s millionaires can still buy a lot of goods for their “money” here in the USA’ but the US dollar has been hemorrhaging purchasing power since 1971 and its descent is picking up steam as trillions are being created out of thin air. If you were a millionaire in the 1970s you were in rarified air. Today, if you are not a millionaire you are likely struggling financially unless you are just starting out.
While I hope we do not follow the same path as Zimbabwe, Argentina, Brazil, Venezuela, Weimar Germany, etc. we are taking the exact same actions that got them to where they were going. It is just taking longer to get there because the world depends upon the US dollar to settle a lions share of world trade. This creates demand for dollars and supports the value- to a point.
I have to wonder at what point too much “printing” is too much. Already, we are paying a heavy price that many recognize as inflation. Most people assume that prices rise over time because that is all we have seen since the 1970s. This has not always been the case. If you have sound money (which we actually had until 1913 and to a lesser extent until 1971) then technological advances and efficiency causes the exact opposite- deflation. I wrote years ago about a basket of goods that cost $200.00 in the year 1800 was actually $100.00 in 1900 because of advancements made in farming and transportation. This SHOULD be our experience. With all of the technical innovations we should be paying FAR less for goods.
This is a clear sign that our “money” is being debased and that the trend of higher prices may just be getting going. As a matter of fact, Egon von Greyerz pointed out on King World News that food commodity prices have risen 54% since July of 2020. No inflation???
Our health insurance just rose to nearly $2800.00 per month. No inflation?
This is likely one reason why so many are begging for a “living wage”. I am pretty sure that even the $15.00 minimum wage would still have many collecting food stamps and living a life far below what they were expecting. It is not a wage problem- it is a purchasing power problem.
According to the US Department of Labor the first mandate for the minimum wage to reach $1.00 was in 1956. At that time gold was $35.00 per ounce so you would have to work 35 hours for an ounce of gold.
Today, gold is trading at $1855.00. If the wage earner was paid in real money (gold) the minimum wage today would be $53.00 per hour. This is with MASSIVE manipulation to keep the price of gold down.
I have discussed many times HOW the manipulation works. I will add that, according to King World News, the paper “fake gold contract” market trades nearly $70 trillion yearly while the annual mine production is around $280 billion. It is obvious in looking at these numbers that a miniscule amount of real gold is changing hands in the casino.
According to John Williams of Shadow Government Statistics, if we were to get back to the inflation-adjusted high in 1980 of around $850.00 the current price would have to hit $20,900.24.
If gold was $10,000.00 an ounce the minimum wage would be over $285.00 per hour. Again- not a wage problem- a “money value” problem.
He also states that for silver to hit its all-time inflation-adjusted high of $50.00 in 1980 it would have to hit $1000.00.
I will ask this- are things more economically insane now than then? In 1980 our national debt reached a trillion for the first time. Now there are quarters when we add a trillion.
These are a few reasons that I say when gold breaks out and the manipulation fails the price is likely to rise exponentially. It will likely not meander up but explode.
In addition, unlike stocks, which can be undermined by being over-indebted gold has no debt attached to it. To me, this takes the uncertainty of a future cliff out of the equation. I have often said that when the “market” breaks down it will likely begin in the debt market with defaults. This is why I also believe the Fed and central banks are buying bonds. It is likely that, as the common shareholders get wiped out, the bondholders will inherit a company that has no debt. Of course, anyone who worked for the money to purchase those bonds would be worried about the time between the bankruptcy and the reorganization but if you can “print” the money up at virtually no cost then what is THAT risk?
I was waiting to see if the unemployment claims would improve and they did- slightly- to 847,000 new claims last week. Millions and millions are sitting on their couches waiting for government “money” and wondering if they will ever work again. To me, this means that the “printing” is just getting warmed up and the already insane amounts of “money” being conjured up out of nowhere may be about to grow exponentially. Remember, each new dollar conjured up is a unit of debt and – debt kills economic activity. This will likely lead to ever more “printing” to keep the illusion of solvency alive for as long as they can.
As the dollar and most other currencies are being “printed” into oblivion I believe the smart money is already buying hard assets. It was just reported that Bill Gates is the largest owner of agricultural land in the USA. This may also explain why central banks, who can conjure up trillions in currency units with a few mouse clicks, have been on a precious metal buying binge in the last 3 years.
I always ask- what do they know that we don’t? My guess is that they know just where the cliff is and they are getting prepared for the day after the cliff arrives. If we wait until then it will likely be far too late.
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