SWIFT. Society for Worldwide Interbank Financial Telecommunication. This is the system that connects over 11,000 financial institutions in 200 countries and allows for payments between these institutions.

It allows payments from one country to another- like when Russia sends its oil, gas and other exports to the EU, USA or elsewhere. This is how they get paid.

We have heard that Russia has been banned from SWIFT. While this is partially true there are many entities in Russia that still have access to SWIFT (mainly the energy sector) because closing that down would be more of a burden on the EU than on Russia.

Only Saudi Arabia is pumping as much oil as Russia and Russia is the major natural gas supplier to Europe. Oil and gas prices are skyrocketing and the sanctions on Russia have not really had any impact on supply yet.

I believe that SWIFT now may have another meaning. I believe that China is watching our game plan to deal with Russian aggression and will use the information to their advantage when they decide the time is right to take Taiwan back. Based upon the current information I believe that the run on the US dollar may begin rather SWIFTly.

The ONLY reason that the USA has been able to live FAR beyond its means for far longer than makes any sense is that we have the world’s reserve currency. This leads to most trade being settled in US dollars and most reserves being held in US dollars. This leads to a demand for the currency and props up the perceived value.

What is that “perceived value” going to be now when the world sees that, in time of need, which is why you have “reserves” in the first place, there is an entity that can steal your assets and leave you destitute?

Is this why Russia, China, and most central banks have been buying gold in record amounts for the past 4 years? Is that why many countries are repatriating their gold- to make sure it is there when they need it?

I believe that the US dollar is in big trouble. It appears that there may be a small upside for a while because of the fear of what is happening in Ukraine and in other places, but that strength will likely be very short-lived.

The problem is that, if I am correct, the inflation we see now is extremely tame compared to what may be coming in the near future.

Commodities (hard assets that have to be produced and shipped and can’t be conjured up out of nowhere) have been skyrocketing. The main reason is likely the “printing” by central banks, but it is also now because of the war in Ukraine. I was aware that Ukraine was Europe’s bread basket. The fact that wheat futures were stopped -limit up for 3 days in a row shows what traders think of what will happen to the price of wheat.  I was unaware of how important Ukraine is in the production of semiconductor chips.

According to Techcet, California- based market research firm, our (USA) neon supply which is used for lithography processes for chip production comes almost entirely from Russia and Ukraine. With the current supply shortages this could get VERY interesting shortly. In addition, palladium is used in the manufacturing process for semiconductors also and Russia is a major supplier of palladium.

It appears to me that this “war” will give those “in charge” the cover they need to deflect the blame for our (and most of the worlds) continuing economic collapse.

For anyone who questions my assertion that the economy is collapsing consider this:
Real inflation (not the made-up 7%) but what is actually being felt is 15% or HIGHER.

Real unemployment (not the fake lower than 4%) is actually 25% or more and as high or higher than during the great depression. What is the REAL misery index? Higher than in the 70s for those of us that remember it.

We are running a trade deficit with the world of over 1 TRILLION DOLLARS.

There are more people “collecting” from the system than producing goods and services to grow our economy. Cash conjured up from nowhere is hiding the fact that, according to the USdebtclock.org as of 3/3/2022 at 10:30 over 99 MILLION working-age adults are not employed and NOT counted in the “official” numbers. There are 332 million people in the USA and 131,519,130 have full time jobs. Do the math. Over 175 MILLION are dependent upon the system and 131 MILLION are pulling the cart.

In addition, the only way many cities, states and even our Federal government can keep the illusion of solvency going is by going deeper and deeper into debt. This has gone on FAR longer than anyone could have imagined. Of course, with the shutdowns of the last couple of years tens of billions were sent to places like Illinois, California, and many other states to forestall a full implosion of finances. In my opinion it is only a matter of time- and not too far off at that- before reality rears its ugly head.

I have not even brought up the state of personal finances which shows that many are in uncharted waters when it comes to increasing debt. My opinion is that many are going deeper into debt to maintain the lifestyle they have become accustomed to. Rising prices are creating havoc in many people’s budgets already and with the likelihood of prices rising even faster in the near future, it appears that personal finances may go over the cliff around the same time cities and states have their problems exposed. None of us can “print” money to pretend all is well like the Feds BUT they have already conjured up trillions of dollars that have been used to let cities, states and individuals pretend they are solvent already.

If this precarious situation wasn’t enough to make most people question whether their paper “assets” are safe- what about the prevailing actions taking place around the world like:
Anyone who donated to the trucker rally in Canada had their bank “assets” FROZEN – some stolen.

Anyone not agreeing with the USA has their assets FROZEN- some stolen.

Anyone with “too much money” in Cyprus, Spanish or Italian banks found out the hard way about BAIL-Ins where those with “too much” had a portion stolen. By the way, the FDIC has similar bail-in plans and much information can be found at FDIC.gov. You will get an eye full.

Is it really Russia invading Ukraine that will be the catalyst for a worldwide economic breakdown or will it just be used as the excuse?

By the way- WHAT IS THE VALUE of a PROMISE that CANNOT BE KEPT? It appears to me there are a multitude out there just waiting to be exposed.

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.

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