Hockey great Wayne Gretzky always said that his greatness in hockey was from going to where the puck would be- not where it was at that moment.
I believe that investors, particularly at a time like this, should consider the same strategy today. It is pretty obvious to anyone paying attention that the paradigms are changing quickly. My take is that those who have been used as slaves for money “printers” are waking up. I believe we are seeing a transfer of wealth taking place but not necessarily the one the Davos crowd had in mind. Their intent was to own everything and that we, the peons, would “own nothing and be happy”.
Of course, they were going to (and still may) do this by conjuring cash up out of nowhere and buying EVERYTHING. It is obvious that they are well on their way as housing is now out of reach of most first-time homebuyers, rents are skyrocketing, and people are going deeper and deeper into debt to maintain the illusion of their “lifestyle”.
Of course, once the debts default the banks will then take ownership of the physical assets used as collateral and they will own a WHOLE lot of not only real estate but many other assets also. We now know what Thomas Jefferson was talking about when he said that if the USA had a central bank our ancestors will be renting back this land we conquered- first through inflation and then deflation.
Standing in the way are the countries that produce what the world needs to survive. Russia has said that “it is our product and our rules”. This will, I believe, embolden many other nations like Saudi Arabia, China, and many others to do the same. Russia, China, many middle eastern countries, India and the rest of the BRICS nations are actively pursuing a new reserve currency based upon the commodities that the countries produce.
I believe that the BRICS and Middle Eastern countries are well aware of our being able to get hard assets and finished goods for no more than a click on a computer screen with no real value being exchanged.
This will lead to real tangible goods being traded for other real tangible goods instead of a piece of paper or computer blip. If you are a producer of oil, gas, gold, uranium, food, water, coffee, etc. would you rather be paid for your efforts with a currency that will likely hold its value or one that is conjured up out of nowhere in virtually unlimited amounts and has already lost, according to my calculations, 97% of its purchasing power against real money (gold) since the central bank came into existence in 1913? Most of the destruction in value has taken place from 2000- 2022. The currency most used is “guaranteed” by the most indebted nation in the history of the world and has seen its rule of law turned upside down.
It is pretty easy to see that we have clowns running the west- probably installed by those who really call the shots because they are either clueless enough or corrupt enough to do what they are told regardless of how idiotic they may look.
Just think about the EU. In looking to punish Russia who is really suffering? It is the people of the EU who are experiencing inflation that has not been seen in decades. They are seeing rationing and getting warnings about rolling blackouts and a cold, cold winter coming. This has happened because nuclear plants were shut down and all the reliance was placed on Russian natural gas and oil. The EU, being the toady for the USA joins in on sanctions and now they are getting less natural gas and are trying to stop Russian oil from being imported also. In the meantime, they are recommissioning their COAL power plants to make up the difference. So they take nuclear- which produces ZERO carbon emissions and go back to the dirtiest fossil fuel COAL! That would be bad enough but guess where the majority of the coal comes from? RUSSIA! This is beyond all belief!
Here in the USA, as families are struggling to stay afloat and we have inflation skyrocketing the sanctions are biting us hard also. In addition, the clown show in Washington has been vilifying the oil and gas industry. Instead of giving incentives to produce more they are being threatened with windfall taxes and extinction in the next few years. Why would ANYONE want to put capital to work with those conditions? Expect this to get MUCH worse.
The sad part is that, as energy costs rise, this will lead to far higher prices across the board. You need energy to produce food, fuel, electricity and all consumer goods. You need energy to transport, store and sell the goods. A rise in energy prices equates to a generally rising cost structure for EVERYTHING.
In the meantime, how are those sanctions affecting Russia?
The Ruble is the best performing currency in 2022 even though our president assured us the Ruble would be turned to rubble. Oil and gas exports are up 55% year over year and the revenue is just shy of a BILLION dollars per day.
To me, this is a clear warning to those who think the “money printers” hold all the cards.
Sri Lanka has gone bust. They rationed gas at first and now have suspended all sales. All supplies (food, etc.) are constrained or unavailable. They first tried the IMF but have recently contacted RUSSIA to purchase discounted oil and gas. They didn’t call the US for aid to pay but went directly to the source.
When we turned tail and ran out of Afghanistan the Saudis were quick to sign a security agreement with RUSSIA. Turkey (NATO Member) chose Russian missile systems over US systems because they were superior.
As nations see costs spiral upwards do you believe they will look to the “printers” and ask for dollars, euros or yen? Or will they be “friendly” to RUSSIA and import food, fertilizer, and energy to keep their economies afloat?
I believe we are seeing a world at a crossroad. The “printers”, I believe, are about to be exposed as the frauds they are and it is going to lead to a massive shift in global economics where the true leaders will be those that produce REAL stuff and not computer blips.
Keep in mind that as this plays out it is EXTREMELY likely that all of the artificially propped up debt and those assets supported by it will not only crater in value but may cease to exist all together. Bonds, in particular, but also many stocks fit this bill.
On the other hand, as people demand real assets for real goods that have value look for true money- like gold and silver to shine like we have never seen in our lifetimes. It is also likely that most commodities will rise exponentially as the fiat currencies fall by the wayside.
It appears to many that we may experience deflation because of demand destruction. I wouldn’t bet on it for necessities. There is an obvious problem with supply and demand for energy, food, water, etc.
I would not be surprised to see deflation in paper assets and in goods that people may want but don’t necessarily need.
I think Wayne would likely be owning gold, silver and other commodities as well as some companies that produce them if he were an investor rather than a hockey great.
A bond and cash (fiat currencies) are assets that “promise to repay”
What is the VALUE of a promise that cannot, or will not, be kept?
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.