Gold has been moving relentlessly higher. Gold stocks, which have lagged in performance in recent years have been playing catch up in the past few months.

In one way, I am loving the moves because it validates what I have been predicting for quite some time. As I have written in the past- you can suspend reality for a while, but you can’t keep it going forever.

In another way, I am not really happy with what I am seeing. I have an uneasy feeling that the downturn in propped-up assets like stocks, bonds, and real estate- that in my view is LONG overdue- may be on its way.

There are so many signs out there that are being hidden in plain sight that it is hard to know where to start. First of all, this is a global problem so to focus just on the US would leave out dozens of potential black swans.

I believe that this all begins and ends in the debt (bond) “markets.” They have been artificially manipulated to keep prices high and yields low. Different countries give different reasons but the main reason is to make funding governments less expensive so they can continue borrowing beyond their means. It also leads to inflation and a lower standard of living for you and me. In addition, it allows corporations and individuals to take on more debt.

Many pointed to Japan as the poster boy for being able to conjure up cash to oblivion and get away with it. At least get away with it for far longer than anyone could have imagined. That illusion is becoming more and more unsteady as their bond “markets” are mostly owned by the Japanese Central Bank and even with massive “printing and buying” schemes the cracks are showing and rates are rising.

The Eurozone is another shining example of failed monetary policy as yields there are also spiking in France and many other countries. Here in the USA massive buying by the Fed and Treasury are keeping the illusion of calm FOR NOW.

Normally, rates would rise when the economy is strong. The fact that so much effort is being spent on keeping rates low is broadcasting a FAR larger problem.

Our economy is WEAK. This is regardless of the mainstream brainwashing that goes on 24/7.

If the economy really were strong, we wouldn’t be seeing record amounts of layoffs, record amounts of personal and corporate bankruptcies, exploding homelessness, record credit card debt and defaults. Just to name a few obvious signs.

The bottom line is that the USA and indeed the world may be reaching the point of debt saturation. There is FAR too much supply and not enough demand. This is true of government, corporate and personal debt.

One of my favorite questions is WHAT IS THE VALUE OF A PROMISE THAT CANNOT BE KEPT? Unfortunately for many we may get that answer soon. Keep in mind that in a default of a corporation the first to lose is the common stock shareholder. Also keep in mind that a lot of the current “market” performance is linked to share buybacks with cheap credit and passive investing by workers into 401ks. What happens when inflows turn into outflows?

Can a person who loses their job still pay their bills- of which a large portion are DEBT payments? Can cities and states continue spending when their tax receipts fall? Can sovereign governments just keep on “printing, buying and spending” forever with no consequences?

They can “print” all they want and pretend that they are getting something for nothing but eventually the piper must be paid. INFLATION is the outcome and the endgame for these actions.

All the people living paycheck to paycheck-far more than many realize-even high wage earners are in immediate danger if they are one of the millions to lose their jobs. As companies go bankrupt employees lose jobs. Even companies like Chevron are announcing layoffs of over one thousand employees. Ongoing jobless claims are at record highs and the outlook is deteriorating at an accelerating pace.

I believe that this is a toxic mix where many are losing jobs and prices are rising relentlessly. This is a double-whammy that could transform our country into a desperate mess in a relatively short period of time.

Many are predicting a problem in 2026. This is likely because the short-term payouts to government workers and others will expire shortly.

In the meantime, instead of focusing on our infrastructure and the well-being of our citizens (mainly in the USA and Europe) we are focusing on defense (DESTRUCTION) rather than construction. The Treasury issues debt, the Fed funds it and we blow it by spending it on consumption and our military. Instead of issuing a debt that can be paid off over time with production we are CONSUMING far more than we are producing and are at a point where we can’t even afford the interest expense without conjuring up cash (backed by nothing) out of thin air.

It is obvious that we are in a precarious situation where it won’t take much to topple this whole debt-based system on its head.

I believe that the gold price rising as it has been, is forecasting something. I believe the big money and central banks are preparing in earnest for a big change in paradigm.

Another big tell is that many hard assets are rising in price without any meaningful participation by retail investors. This likely means that big money is front running what may be the bull market of a lifetime. Remember, gold and other hard assets are priced by supply and demand but also particularly in gold’s case it reflects the loss of purchasing power of the currency. This is why when people ask me “How high can gold go?” My answer is “How low can the dollar go?” That is why my answer- based on history- is infinity.

All fiat (backed by nothing) currencies in history have ceased to exist in their original form because of the over-issuance of the currencies leading to its ultimate demise. There is NEVER something for nothing in the long run.

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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