While many of us are finding the things that we buy skyrocket in price it is likely that we haven’t seen anything yet. My opinion is that this is a man-made crisis that is totally avoidable but will likely NOT be avoided because those “in charge” need a crisis to move from our failed fiat system to a new system which they would like to impose. This is so that they can implement total control through CBDCs (Central Bank Digital Currencies), social credit scores and massive surveillance.

In the meantime, as prices are rising, there are many signs that we are in the early innings of a massive inflationary spike. In a rare moment of candor Fed President Powell admitted in his Humphry-Hawkins testimony last month (Appearance before Congress) that higher interest rates would NOT lead to lower food and oil prices. Of course, they can’t “print” anything but more DEBT.

The fact that we have grossly negative real interest rates is only one reason why inflation may become more rampant. One announcement which really puts this into focus is that because of rising natural gas prices BASF (German chemical company) had to pay an ADDITIONAL 800 MILLION Euros over last years costs to keep its plants operating in just the second quarter of 2022.

After the earnings report BASF CEO Martin Brudermuller said “We are reducing production at facilities that require large volumes of natural gas, such as ammonia plants.”

Ammonia plays a critical role in nitrogen-based fertilizers, plastics and diesel exhaust fluid. Also, a byproduct of ammonia production is high-purity CO2 which is heavily used in the food industry.

While many are worried about keeping warm when winter gets here (a serious concern) we can now see an immediate problem. With the price of natural gas soaring, it is going to have a profound impact on farmer’s costs going forward for fertilizer and could also lead to severe supply constraints so not only will it cost more to produce the food but there could be a lack of fertilizer which could reduce the harvest and lead to further shortages and higher prices again. Let’s also not forget that most of our packaging is plastic and that most of our deliveries are done in diesel trucks. This is just one example of how rising costs for fuel can cause a cascading effect among many facets of the economy.

I am also wondering about the employees who may be laid off or put on furlough. How will that help consumer spending and tax receipts? Another nail.

It is also glaringly obvious that the central banks- mainly the ECB, the Fed and Bank of Japan are involved in a massive scheme to keep rates low by buying bonds and are also likely buying stocks. The Bank of Japan actually admits it. While this is likely what is leading to “markets” rising again in the short-term it is more than likely that in the longer-term it will be massively inflationary. Of course, they will blame it on Putin or global warming but as Powell (Fed President) actually admitted “Inflation is always and everywhere a monetary phenomenon” In plain English “printing” money out of nowhere is what causes inflation. In the last 4 weeks the Fed has “reduced” its balance sheet by ADDING $8 BILLION to it. How does THAT work???

Of course, the central banks are pulling out all of the stops to mask what they are up to. They compare fiat currencies to each other so as they all fall together the actual loss of purchasing power is hidden. The fallacy of a “strong dollar” should be easily seen as a joke when inflation at 15-20% means we are losing purchasing power by 15-20% THIS YEAR. If that is strong I would hate to see weak.

I have written in the past about the collusion to keep the price of gold suppressed so, again, to hide the loss of purchasing power of fiat currencies and make the dollar look “STRONG”. There are MANY reasons why this current paradigm can’t last forever but there is a GLARING chart that shows just how much effort it is taking at this time to keep the illusion of gold being risky and not being an inflation hedge. The JP Morgan brokers are on trial in Chicago for spoofing. This is where fake trades are inputted with no intent of executing the trade but in order to move the “market” where they want it to go. This is just the tip of the iceberg. The real action (which nobody is being prosecuted for) is in the derivative “markets” where, like central banks can conjure up cash out of nowhere, banks can conjure up “paper gold” contracts (no physical gold needed) in unlimited amounts to give the illusion of more gold than actually exists and can move “markets” far more meaningfully than anything a spoofer could do.

Because of algorithmic trading having taken over, a carefully placed buy or sell order can make the “market” move meaningfully- either up or down. Of course, at the behest of the BIS (Bank of International Settlements) almost ALL of the manipulation has been to the DOWN side.

So why do I see a problem brewing right now?
In January we saw gold start to take off and has since seemed to have cement shoes. In a report released by the US Office of the Comptroller of the Currency it showed that in the first quarter of 2022 the precious metals derivatives (paper contracts with little to no actual gold) increased a stunning 520% over the 4th. quarter of 2021.

This leads me to believe there is a major effort to keep the price suppressed at this time and the end of this rigging is coming. I only wish I could say when.

I continue to believe that we are heading towards a cliff where a whole lot of debt and equities will be wiped out- as in going to zero. The math supports my thesis. It appears to me to just be a matter of time.

I believe that Putin, Xi and many others also see the writing on the wall and that is why they are starting their own reserve currency (announced at the BRICS conference) and backing said currency with commodities produced by the participating countries.

How far along this is I really don’t know but I do know they have been working on this since 2014 or so and only made an “official” announcement last week. Stay tuned. This is likely to have a MAJOR negative effect on the US dollar in particular but also all currencies that are backed by nothing.

In this scenario inflation could reach heights that we can’t imagine at this time. It is also likely that as countries turn more inward (deglobalization) there will be far more competition for goods. Those with the strongest currencies at that time will get what they need- possibly at FAR higher prices than we see today.

When this thing unwinds I personally want assets that can’t be conjured up from nowhere and that are actually assets and not units of debt- which almost all paper assets are. Even most stocks-even though they show ownership of a company’s assets can be undermined in no time by a default on the corporation’s debt.

I’ll take hard assets like gold, silver, food, oil, etc. rather than counting on a third party to make good on their promises to repay. The math says – GOOD LUCK WITH THAT!

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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