Another Fed meeting has come and gone and basically nothing much has changed. The outcome, which I am sure was totally expected, is that interest rates will be held low for as long as possible and there is no amount of “money” that the Fed won’t create to buy assets and manage virtually all prices. This sounds more like the old Soviet Union than the USA that I used to know and love.

After an initial jump in the “markets” reality started to set in and the initial euphoria turned into nothing much more than a shrug. I believe that the revelation that Steve Liesman revealed on CNBC- that the Fed doesn’t see meeting their “over 2% inflation target” being reached for years was the reason for the abrupt change in sentiment.

It appears to me that they are looking at reality. The trillions upon trillions of dollars that are being conjured up out of nowhere are propping up paper asset prices but is not doing much for the overall economy. Of course, the continued lockdowns are not doing us any favors either.

While the overall economic numbers have somewhat stabilized overall the fact is that after a slight recovery- most likely due to the stimulus packages- which are now ended at least for the time being- the economic numbers are starting to turn south again. While the GDP numbers were “only” down 0.1% from July there were some disturbing categories like:
Gasoline stations contracted 15.4%, restaurants contracted 15.4%, department stores were down 16.9% and clothing and accessories were down 20.4%.

In another surprising announcement BP- in its annual energy outlook report said oil consumption may NEVER recover to pre-pandemic levels. Digest that! They also said that demand for oil will likely fall over the next 30 years.

It appears we need another round of stimulus to pretend that we can afford the lifestyles we have become accustomed to.

This money “printing” is being used to enrich those at the top and their buddies near the top at our expense. Just think about this. 15 short years ago if someone had saved a million dollars they could have deposited the money in a virtually riskless asset like a CD or annuity and made $50,000.00 or more per year without touching their principal. Also, 15 years ago, the prices of goods were also far less so you could have gotten by easily assuming you weren’t drowning in debt.

Fast forward to today where it is likely that if you go to a traditionally “safe” asset- which as anyone who knows me knows that I always say there is no such thing as “safe”, particularly when the Fed and most other central banks are conjuring up money in unlimited amounts, you would likely need 2.5 million or more to create that $50,000.00 per year of income. In addition, prices are FAR higher than they were 15 years ago making it more likely that you would need even more to not deplete your savings over time.

Basically, as the central banks conjure up “money”, keep rates low and asset values high they are effectively taking money that the society should be earning on their deposits and investments and handing it over to those who have investments in riskier assets. This makes their friends awfully happy but leads to misery for those left behind.

The funny thing to me though is that even those that appear to be being enriched by central bank policy are not really benefitting as much as they think. Most of the “gains” that they see in their stock and bond portfolios could disappear at any time and if those assets were being measured in real stable money- like gold- they would not be anywhere near as impressive as when you measure their worth against a rapidly depreciating asset- like the US dollar or any other fiat currency.

For anyone who thinks the dollar has been strong- it has only been strong when measured against other currencies that are being debased even faster. As a matter of fact, since the year 2000 most major currencies have lost 85% of their value versus gold. Hence, the reason gold is up over 600% when measured in US dollars since the year 2000 (that is 30% average annual return- more than 4x the return of the major US stock averages). In other currencies the numbers are even more stunning and this is at a time when all the central banks, major banks and others are actively SUPRESSING the price and buying in record amounts- all while hoping we don’t notice and do the same!

In the meantime, virtually all major paper markets have become one major gambling casino where just last week coffee prices collapsed by the most in a decade. Why? Because some hedge funds got caught on the wrong side of a trade. What happened to supply and demand?

I believe this is just one illustration of how the speculators and gamblers are impacting farmers, miners, and those who produce productive assets. These people who are the gamblers and speculators create nothing but just skim profits and impact those who actually produce what we need to live and survive.

In my opinion these antics have cost us millions of jobs and have caused many bankruptcies because of the false prices that are manipulated by speculators.

It is my opinion that the only way to win this game at this late stage is to not play.

I believe that being out of debt is a first step. Second, I believe that you should invest in real assets or at least companies that produce real assets or necessities of life. I also believe that those who have purchasing power in the next few years will be richly rewarded as the “printing scheme” reaches its ultimate end and the assets that are grossly mis-valued revert to the mean.

Look for those assets being suppressed to fly and those assets being propped up to collapse when the game nears its end. Are YOU ready?

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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