As I watch the Fed and other central banks manipulating just about every price imaginable- with the help of their buddies at the major banks (actual owners of the Fed) and their hedge fund buddies, I have noticed a drastic change.

The change I have noticed is that it seems that most, if not all, central banks are following Japan’s lead.

Japan has been mired in a deflationary funk this entire century so far. The Nikkei Index is still Far below its all time high of nearly 40,000 in 1989. It is currently WAY UP at 28,600. That is over 28% BELOW where it was 30 YEARS AGO. In the meantime, the Bank of Japan (Japan’s central bank) has become the Japanese bond market. Gee, I guess they didn’t factor in that someone who had to actually earn the money invested might expect some sort of return on their money. They are actually “printing” money to pay bills and finance government spending. The Bank of Japan has also bought so many ETFs (exchange traded funds) that they are majority shareholders in many of Japan’s largest companies.

They started all of this after the populace was debted-out. They couldn’t issue any more debt because those who were buying the debt had reached debt saturation (carrying as much debt as could be serviced-even at 0% or LESS).

It appears that this occurrence has taken place across the globe as now all central banks are not just lenders of last resort but because they have pushed that envelope too far, they are now BUYERS of last resort. They are creating fake demand for assets with fake money. This is temporarily lifting the “prices” of assets with nothing more than an illusion of value. As Warren Buffett says, “Price is what you pay- value is what you get”. So many are worried about price and are virtually ignoring the value (or lack of value) that they are purchasing.

This leads me to believe that we are nearing a point where the “assets” that people own are likely worth FAR less than they appear to be.

This entire edifice is built on a pile of toxic debt. I call it toxic because it is obvious to me that if fiat currencies maintain anywhere near their current values most debt owned by individuals, corporations, cities, states and nations are unpayable. What is the value of a debt that can only be repaid if the means of repayment is debased meaningfully?

Debased means that you may get paid back every penny owed but the currency you expected to buy you a dollars worth of goods may be worth a dime or a penny. Couldn’t happen? We already lost 98% of the US dollar’s purchasing power since 1913 and the lions share of that loss has been since 1971 and has really picked up steam in the 2000s with no good end in sight.

The last 2% should be a real bargain for all of us.

This leads me back to where many of you are likely getting tired of hearing me say.

What assets are not reliant upon someone else paying you back and providing the value that you expect? The answer, to me, are hard assets led by gold and silver but also virtually anything that is not a debt instrument. Even the US dollar is a debt instrument so when you get “paid off” you are being paid in DEBT. This is likely one reason why many are drawn to bitcoin and other cryptos because they are not debt instruments. I am still not a believer in any cryptos because I believe that the central banks will, at some point, decree that these “assets” are worthless when they issue their own currencies. I believe that there is a cliff out there somewhere and anyone who is a trader may make a lot of dollars in the short-term but may lose it all at any moment. Personally, I’ll pass.

Personally, I want assets that can’t be conjured up from nowhere and have a tangible value. My guess is that when the populace wakes up to the fraud, manipulation and “printing” schemes they may feel the same way.

Be Prepared!

Any opinions are those of Mike Savage and not necessarily of those of RJFS or Raymond James. Expressions of opinion 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.