There is a fellow named Martin Armstrong who has been putting out information based upon his SOCRATES computer program. Over time, he has been very accurate in his forecasts. It has been a mistake to bet against his prognostications.
At this time, I am going to disagree with one thing that he is talking about. Namely, that he believes the US Dollar is going to strengthen. The reasons he gives date back to World War 1 and World War 2 when cash flowed into the USA because of the wars in Europe and capital controls put in place.
His program says that war is coming to Europe no later than 2026 and that is his reasoning behind his assumed dollar strength.
While it may make sense in looking at history, this is what I believe is being missed.
During the time of WW1 and WW2 the USA was viewed as a safe haven. We had a rule of law, liquid markets, and an ocean between where the carnage was taking place and our homeland. It is easy to connect the dots and assume it will be the same this time.
As Lee Corso says on College Football GameDay “Not so fast!”
Much has changed since World War 2 and most of those changes have really accelerated in the past 5 years. How many countries actually view the USA as a safe haven today? We weaponized our currency and treasuries against anyone who has not followed our directions. The rule of law has been flipped on its head with rules for those who are “in charge” and rules for the rest of us. The USA is functioning as a banana republic. I called this a decade ago, but it is so obvious now it can’t be ignored.
Those in power at the time are using their power to neuter the other side. We are conjuring up cash to pretend we are prosperous while our economy is crashing. This is causing more cash to be conjured up and hastening our ultimate economic demise. It is really getting ridiculous now with over $1 TRILLION every 100 days needed to plug the gap between what we are bringing in and what we are spending. We have also made future promises that are in the 100s of trillions that we have no funding for at this time. The sad part is – this is what they admit. It is likely FAR worse if we include what they DON” T let us know. (Off-budget items)
(USDebtclock.org and US Treasury)
I don’t believe this is being lost on the world.
Already, before any wars in Europe are taking place countries are asking for their gold to be returned, selling Treasuries (over $1 TRILLION in the past 2 years), and buying gold in increasing amounts.
The US dollar and our Treasury market is not viewed around the world as that safe haven it used to be.
In addition, we have a president who is demanding a weaker dollar. He is demanding lower interest rates which will make our currency and debt even less desirable to foreigners. In fact, it appears at this time he is looking to replace many Fed governors who may disagree with his plans.
Anyone who is looking to invest in almost any asset will do far better if they can determine if the dollar will be weak or strong going forward. Personally, I see no plausible scenario where the dollar actually strengthens. The debts are FAR too high, our commitments are FAR too stretched and those that have been funding our deficit spending for decades are closing their wallets. This will lead us even further down the path of the Fed and Treasury monetizing (conjuring up cash out of nowhere to pay current bills, retire maturing debt and even pay interest owed on current debt).
The most likely scenario is they “print” until the dollar reaches its intrinsic VALUE which is probably near ZERO.
Keep in mind that gold, silver, and commodities reflect not only supply and demand but also, particularly in gold’s case, the purchasing power of the currency. This is one major reason that the Fed (the last central bank trying to keep the price of gold down) suppresses the price. To give the ILLUSION of dollar strength.
The illusion is being exposed by other central banks buying every dip artificially engineered by the Fed and their owners, the major US banks.
Get ready for FAR more dollar weakness and higher prices for almost everything we need like food, water, energy, and all necessities. This could also lead to lower prices for luxuries and things that people might have splurged on if necessities were not eating into their incomes the way they have been.
A weaker dollar is kryptonite to the middle and lower classes as the rich see their asset prices rise along with everything else.
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.
Raymond James has no affiliation with Martin Armstrong and does not endorse his work.
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.