I remember writing an article called “dichotomy” a few years ago. The word means “a division or contrast between two things that are- or are represented as- being opposed or entirely different.

It has become glaringly obvious in the past couple of weeks that not only did we NOT have the greatest economy of all time but we actually had the dichotomy of it- the greatest debt bubble of all time which masked the fact that we have been insolvent since at least 2008 and probably before that.

As time is passing and most people are hunkering down in their homes, unable to work by government mandate, this should allow for a great reason that the economy failed. In the eyes of most it will be “the Virus”. Actually, as I have laid out here for years this collapse was long overdue. The debt levels of individuals, cities, states and nations have risen far above where any sane person could expect to be repaid. At least if the “money” holds anywhere near its current value.

It appears that the Fed is taking all necessary precautions to make sure that the US dollar holds as little value as possible as trillions are being conjured up out of nowhere and being sent to other central banks, being used to bail out large banks and corporations and actually BUYING stocks, ETFs, Corporate Bonds, Treasuries, etc.

The Fed balance sheet hit a record $5.5 Trillion- up over $1 Trillion since September.

This will likely be just the opening act. The Fed balance sheet could be over $10 Trillion by the end of the year. As a matter of fact, according to Wall Street on Parade, at the pace the Fed is purchasing Treasuries they would own the entire portfolio in 22 months. In the last 48 hours the Treasury has issued $250 Billion in new Treasury Bills. $258 Billion to be exact- Zerohedge.

Now for some more dichotomies:

Generally, the stock market is used as a gauge as to how the real economy is performing. Many are still under the illusion that this is true. If it is, explain to me how the underlying economy is collapsing and the stock market rallying (not just now but for the past 2 YEARS).

Global economic activity is crashing. Incomes for governments, companies and individuals are crashing when we have record levels of debt that just keeps growing exponentially. Morgan Stanley reports that the US fiscal deficit (just US government on the books debt) will explode to 18% of GDP. This would be approaching $4 Trillion and WOULD NOT include Fed “printing” to bail out the banks and central banks of the world.

Goldman Sachs reports that it sees “The Biggest Decline Ever” with GDP crashing 34% in the second quarter. Just this alone should have “markets” collapsing but with the Fed and other central banks buying assets the collapse is avoided for another day.

In a stunning dichotomy the other day Caterpillar announced that they would not offer forward guidance and were shuttering many plants in the USA. In a real market the stock would have collapsed on news like that. On that day though, as the Fed stepped in, the stock ROSE 4%. When I brought up “fake markets” in my articles- this is a great example.

Currently, if you go online or to a dealer you will pay $20.00-$40.00 for a one ounce silver coin and wait 10-14 weeks to get it. In the meantime, the “paper price” or fake price as I call it is around $14.00. It appears that there is little, if any, supply of REAL silver but plenty of conjured up out of nowhere with no backing paper contracts. I believe the day of reckoning is near for the clowns suppressing the price. They have made a fortune at everyone else’s expense but they may give it all back (except for the ones that have bought the real assets on the cheap because of their actions) when there is truly no physical silver to be had and the contract holders demand it.

There is a similar wait for gold and I have seen premiums of $400.00 or more per ounce.

There are many reasons why I believe the end is near for the manipulators. It is certainly is NOT the RICO warrants against JP Morgan or the slaps on the wrist the major players get when caught- it is because mines are shut down and refiners are shut down. This should lead to a shortage of physical metal and could lead to a price explosion that is also long overdue.

Just look at Kitco.com and check the price of Palladium at $2400.00. Compare that to platinum which is historically more expensive at $736.00 (3-31-2020 10:15) The main reason palladium is more than 3x the price of platinum is that there is a physical shortage of the metal. (Both are traded in the paper market also. Manipulation only works when physical metals can be delivered when requested). Only Rhodium has NO PAPER market and trades at $10,000.00 per ounce (3-31-2020).

Finally, anyone expecting a quick rebound after the lockdowns are finally over should really take a long hard look at why that will not be likely. I hear many saying there will be pent up demand. I would agree IF people were working and had their regular incomes but our own government is PREDICTING 35% unemployment-actually I am sure we are already there without the usual massaging of numbers that was taking place for decades. More than likely the REAL unemployment rate could reach 50%- hopefully not for long- but many businesses have already been permanently impaired. (3% of all restaurants are now permanently closed).

Many major retailers are not expecting a quick rebound. On the contrary it appears they are expecting all hell to break loose. A headline on Zerohedge “Retailers Prepare For Civil Unrest- Boarded Up Stores Seen From SoHo to Beverly Hills”.

I haven’t been to NYC for a few weeks BUT there were MANY vacant retail spaces LONG before the virus.

My personal belief is that the economy could take decades to get back to being a thriving economy like we knew prior to this century. It will take some pain to get there. It will involve having winners and losers determined by the markets and not the printing press. It will take being honest about our over-indebtedness and a national will to overcome the fake markets that have taken down our productive economy and replaced it with what appears to be nothing more than a kleptocracy. (Those at the top steal from those at the bottom- the bottom 95% or so!)

Again, this will NOT last forever. Actually, probably not much longer as the staggering numbers are showing. Would you rather place your trust in paper assets that are being artificially held up by “money” from nowhere or a real asset that has to be found, mined or produced?

Which will hold its value when the SHTF and the “money” is recognized as being virtually worthless because it has been produced in amounts that we can’t even fathom?

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.