Things are changing. That is obvious to anyone who has been watching the events that are taking place. The reason I am bringing this up is that events may start to move even faster than many are anticipating. This is particularly true for those who get their “news” from the mainstream media.

It appears to me that we are in the early innings of a tectonic shift in the global economy where the driver of “growth”- has been debt- for as long as we have been alive. It appears that it is now changing right before our eyes into an asset-based system that, in my opinion, is likely to favor those that produce hard assets and is likely to punish those that have become accustomed to conjuring up cash and buying those assets.

For years, the USA and their vassal states in Europe, Japan and Australia have been combining to punish those that have different ideas in a financial manner. Others- mainly Russia and China have been looking for alternatives to using the US dollar to avoid coercion or even isolation.

I saw an interview with Ken Rogoff-famous Harvard professor who said that the US dollar could be replaced as the world’s reserve currency in 20 years instead of 50. Personally, I believe he is WAY off. My belief is that we may be 20 MONTHS away from a true multi-polar world where the dollar will have a FAR smaller role in international trade.  This will lead to a reduced value and FAR higher prices for all of us.

Why do I say this? Many reasons. It starts with Russia demanding either rubles, gold or bitcoin for natural gas and I believe they will sell ALL of their goods that way in the near future. More importantly, in my opinion, is that they have threatened to cut off exports to “unfriendly” countries. This is THE real story. There are reports of unrest across the globe because of food insecurity. Africa and the Middle East are dependent upon Russia and Ukraine for food supplies. This suggests to me that the Middle East and Africa are likely going to want to be known in Russia as “Friendly” so they don’t get their food supply cut off.

In addition, there is the Eurasian Economic group- led by China and Russia but also includes the Stans which were part of the old Soviet Union. Don’t feel bad if you have never heard of the EEG- I didn’t either until I saw an interview with Simon Hunt- a commodities expert with ties to China.

In the interview he stated that the final draft for a new trading bloc and regional currency was due by March 31st. He also said that while it appears there is urgency, he does not have a timetable for this new currency to be unveiled but that it would allow trade between all partners and the value of the currency would be derived from the commodities produced by each country with the dominant currency being the Yuan. He also stated that between Russia and China they hold 54,000 TONS of gold.

It appears to me that if I were Saudi Arabia, the UAE or any other commodity producing country I would much rather take in payment a currency that is backed by a physical good rather than the full faith and credit of obviously bankrupt western economies. In addition, I would not be cut off from receiving REAL goods. I may be cut off from billions of dollars from the USA but if I couldn’t feed the population what good would it be?  Already India is buying Russian oil for Rupees. I also believe they will gravitate towards the new system.

While the mainstream media is doing its best to keep us oblivious to our demise the economic news is continuing to deteriorate at an accelerating pace. Even the made-up numbers are ugly. US factory orders collapsed the most since the April 2020 collapse. Trucking appears to be collapsing also as FreightWaves CEO Craig Fuller said he believes a freight recession is imminent. That would make sense since the last report I saw said that retail foot traffic was down 4% year over year.

We have a central bank conjuring up cash in the trillions, an economy in freefall, we have offshored most of our well-paying jobs and there is NO CHANCE of ever paying off our debts that we have run up in the past 50 years with the currency retaining even a fraction of its value.

You can bet that those around the globe are aware of all these facts. That may be why Saudi Arabia and the UAE are deaf when Joe Biden calls but are more than willing to meet with Putin and Xi.

I don’t write these articles to frighten- but to enlighten. We all better be aware of the precarious situation our “leaders” have placed us in. The founding fathers would be horrified if they saw what this great nation has been denigrated into.

Those warning of global food shortages coming soon:

Joe Biden, Emanuel Macron (France), Germany (food prices likely to rise 20-50%) Spain and Greece have already started rationing food, Blackrock and the UN are both warning of “Famine”.

While many may blame it on Russia and Ukraine you can add in the terrible winter wheat harvests in China and the USA, the weather-related bad coffee crops in Brazil and locusts in the Middle East and Africa. There are also warnings of a possible new dustbowl in the Midwest- just like during the last great depression. History doesn’t always repeat itself, but it often rhymes.

Personally, I prefer currencies that are in countries that produce hard assets like Canada, Australia, etc. and the hard assets themselves or the companies that produce REAL stuff. They benefit as input costs rise because they produce the inputs.

I really hope that everyone who reads this takes this to heart. The investments that have “worked” in the past are likely to be the worst performing asset classes going forward- at least for the next few years and if you are still in traditional assets, you are likely to be VERY disappointed in the near future.

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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