I have spoken many times about our “markets” being nothing but an illusion and that all prices are fake. I believe I have made that point enough but there is another set of circumstances which, it appears to me, is skewing people’s view of reality also.

As the government is setting up for another unprecedented “payout” to the American people (with money conjured up from nowhere of course) and the Fed and other central banks funneling cash to banks, hedge funds and other central banks so they can all “print and buy”, many are under the illusion that once we have a vaccine all will go back to normal.

Of course, this narrative is played up on the financial game shows and “news” outlets which are nothing more than propaganda tools for those in charge. “The markets are up- all is well!”

The economic situation is FAR more dire than we are being led to believe. Without the massive efforts of the government to keep the economic patient alive we would surely be aware that we are in the largest economic downturn in the history of our country and more than likely globally.

The big question to me is how long will the “money” conjured up from nowhere continue to provide the illusion of a functioning economy? My guess is until inflation really rears its ugly head. It is already apparent in food prices and healthcare costs, but it is likely to impact virtually all aspects of our lives.

Right now, there are minor inconveniences like less choices and higher prices for meats or other foods and occasionally not being able to find certain products. This is an early warning, in my opinion, that the supply chains have distress. As people “make more sitting on the couch” collecting a government payout many of the products that we need are not being produced in enough quantity for the demand. This, along with the money “printing” will likely lead to a lot of faux dollars chasing a reduced amount of real goods. This could lead to price explosions in certain products. Tariffs and trade wars could add to the misery.

Of course, the government could end the free stuff and the demand would likely go WAY down because many, if not most, would be left destitute.

We will find out tomorrow how many more will be added to the 56 million that have lost jobs in the last few months. Add that to the 100 million or so who were not counted as being unemployed (even though they HAVE BEEN long-term unemployed) when the BLS releases their numbers.

Does ANYONE believe we have 10.4% unemployment as the BLS says? Come on! 100 million not counted (USDebtclock.org) and over 56 million applying for unemployment benefits in a country of 330 million people?

How long can a country survive when over 50% of its citizens are relying on “money” that is created out of thin air that creates no wealth but DOES create ever-increasing debt with each keystroke? We may just find out soon.

Of course, it is not enough to just manage the markets but there are many other antics taking place right now to give the illusion of normalcy where little exists like:

  • Under the CARES ACT- and by executive order now, near all student loans are in forbearance. The report : Student Loan Defaults Plunge. Sounds great until you realize that payments are not being made- just put off.
  • Auto Loans are about $1.34 Trillion. Around 5.9% are in forbearance. According to Ally Financial 21% of their customers were enrolled in a 120 day deferral program. (How many cars are on the road that are not being paid for at this time and how much longer will it last?) Of course, the reported numbers are great!
  • By executive order evictions are being put off. While I would not want to be a landlord in this situation- or the bank holding the mortgage- it is actually a compassionate move since around *40 million people would be at risk of homelessness without these rules. The homeless population is already exploding but this would be unprecedented. *Marketwatch
  • It appears that inner-cities are being abandoned and housing and rental prices are collapsing in these areas. This has also led to what I believe will be a short-term boom in markets where the newly displaced city-dwellers will buy. After this rush and after the forbearance and eviction moratoriums end look for a LOT of inventory and few buyers as MANY of those that have been laid off or let go have no job to go back to. Supply and demand suggests far lower prices going forward.

I could go on and on but I believe this presents the picture. People are suffering and the “greatest economy of all time” was a lie on an epic scale. The downturn started LONG before any Covid talk as I have chronicled here for the past few years.

The Fed and other central banks have allowed we here in the US, and in most developed countries, to live the lifestyles we have become accustomed to by “printing” money and pretending that it actually has value. It really just adds to our already unpayable debts because every dollar issued is a unit of debt- not equity. Keep that in mind! It still buys real stuff- for now.

It appears to me that the central banks have reached the point of no return- for us. I believe that this was done on purpose so that they could “print and buy” virtually all assets. The Bank of Japan has shown the way on that as I have written many times before.

Many people were shocked that gold and silver got hammered yesterday. Actually, it was overdue.

My opinion here is that the economy is so fragile that ANY disruption in the massive money “printing and buying” or any meaningful interest rate increases would be devastating and possibly terminal to the economy. With this set of circumstances, I believe any pullbacks in the metals sector is a buying opportunity and not a reason for panic for anyone who is invested in this space.

This may also be bullish for stocks in the short-term because the dollar is being debased by being conjured up in unlimited amounts. Again, I have to ask what is the value of something that is infinite and has virtually no cost to create? What is the value of a paper asset that is valued in these virtually worthless currency units?

I believe the answer will shock many when it is revealed. How many of these faux dollars may you need in the near future to get the things you need to live? If you have something of tangible value do you think you may be able to outbid someone who has a green piece of paper for what you need?

How safe will you be when many cannot get those things and may come and try to get them by force?

I’ll bet many more are asking this question after watching our inner-cities burn and hearing the perpetrators threatening to come to the suburbs.

Personally, just a decade ago I would never have thought I would see many of the things we are seeing now like the violence, looting and the tearing down of our most cherished things like law and order, religion and common decency towards each other. I also never imagined negative interest rates or central banks basically counterfeiting and buying out actual countries. And yet, in looking back over the last decade, I am surprised that it took this long to play out.

Many think that 2020 has been a tragic year and I would totally agree. It appears our freedoms may be forever compromised. Many believe that 2021 will be better. While I would like to share that thought I think 2021 will make 2020 look tame. It appears there is an economic reset coming (announced by the IMF no less) and my guess is that there will have to be a real crisis that impacts almost everyone to carry it out.

Be Prepared!

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