I didn’t watch one second of the debate on Tuesday night. I guess the main reason was that every time I listen to either side I know I am being lied to most of the time. From the reactions I am seeing on social media it appears that all I missed was what I expected- nothing.

At the end of the day I believe we are headed for an economic maelstrom that may be unrivaled in recorded history.

While many still believe that our president did a great job with the economy- and to be fair I believe that if Hillary were president we would have collapsed already-the economic numbers don’t lie. Unfortunately, politicians do, and they skew the numbers to make them look better than they actually are.

Let’s take yesterday’s report that announced that almost 750,000 jobs were created last month. That was hailed as “better than expected” and led to gains in stock averages. Too bad that today it was announced that 837,000 people filed first-time unemployment claims last week and the number of people losing jobs per WEEK are larger than MONTHLY job gains. Over 20 million people are still collecting jobless benefits.  By the way, they don’t specify what TYPE of jobs were created either. It appears that those LOSING jobs are losing good jobs- like at Disney, airlines, hotels, etc. that a family may be able to support itself with. It also appears that many employees who were spared in the first round of layoffs are being affected now. The layoffs are starting to move up the food chain. Just this week major companies like Royal Dutch Shell, Continental Airlines, Dow Chemicals, Marathon Petroleum and Goldman Sachs have announced plans to lay off thousands of workers.

Even the most (perceived to be) safe jobs are being culled. It was reported that governor Cuomo in New York was contemplating sending the national guard in to pick up the trash that is littering NYC streets because of a massive budget shortfall and layoffs of sanitation employees. Too bad it didn’t dawn on him to call them up when the city was being destroyed by thugs and crush the insurrection. I guess I shouldn’t expect any different from a guy who had a ship in NY harbor for older patients but decided (more than likely for political reasons) to send those people to nursing homes where hundreds of needless deaths took place.

So far, many people have not had to endure any real negative economic consequences because of the Fed conjuring up trillions, the government making it almost impossible to evict non-paying tenants and those behind on mortgages and “extra” payouts for unemployment. It is quite ominous though, that August saw personal incomes and American’s savings rates plunge- likely because the stimulus was less and economic activity is not picking up anywhere near what would be needed to be considered normal.

For anyone still under the delusion that we have any type of recovery- let alone a V or “super-V” consider the following headlines and ponder if they suggest we are in anything but economic freefall.

  • Meet the Mastermind behind JP Morgan’s Gold and Silver “Crime Ring”
  • Retail On Pace For Most Bankruptcies And Store Closures Ever In One Year:BDO
  • Flurry of Corporate Layoffs Continue As Disney, Shell and Continental Announce Mass Firings
  • The Fed’s Bazooka Is Broken- Will Direct Lending Be Next?
  • Final Q2 GDP Revision Shows US Economy SHRANK -31.4%
  • Copper and Crude Crashing As Growth Fears Re-Emerge
  • US Manufacturing Survey Suggests “The Outlook Has Darkened”
  • Challenger Job Cuts Soared In September, “Spreading To Sectors Outside Entertainment and Retail”
  • Stocks Knocked After Pelosi “Very Skeptical About Deal”

The last headline should pique your interest the most because what it is basically saying is that without government handouts many can’t survive and the economy would collapse. It was reported that government transfer payments now account for 34% of American’s income and that is FAR above any other time in our nation’s history. It reached almost 19% in 2009 in the last crisis which was the previous high. (St Louis Fed) It was also reported that $4.8 TRILLION is what is being paid out as of 2Q 2020. WOW!

A while back I did an article that laid out how much effort it would take to create a trillion dollars. Of course, the central bank can do it with a mouse click but you and I- that’s a different story! We try that and we are in jail!

Assuming a $25.00 per hour job and working 40 hours per week it would take us 19,230,769 YEARS to create a trillion dollars- BEFORE tax of course! Since none of us will live that long it would take over 19 MILLION of us working a full year to create that 1 Trillion dollars. That 4.8 Trillion in transfer payments would take 92,307,691 of us working full time to create that $4.8 trillion.

So what you may say. They “print” the “money” and we still buy stuff. So far, you are right BUT I have been noticing less selection of foods and rising prices. I have noticed many things that are under-stocked or out of stock. Keep in mind you can “print” all you want- if you are a central banker- but it doesn’t produce a darned thing. No food, water, energy, etc.

Not only are they massively producing the dollar (and virtually all other fiat currencies also) but they are also adding to a supply and demand problem that is now showing its first signs in rising prices and scarcity of (for right now) only some items.

Just who will produce the necessities of life if we just “print” our way to prosperity like Weimar Germany, Argentina, Venezuela, Brazil and Zimbabwe?

It appears to me that it may be a good time to stock up on necessities before prices get out of control.

Many may have the opinion that a lack of jobs and economic activity could lead to deflation- and it may- but it appears that with the Fed announcing it wants everyone to have a digital wallet so they can transfer “cash” when necessary and bypass the bickering in congress any traditional metrics can likely be thrown out. It appears that they will “print” until the “money” that isn’t even printed is revealed to have very little if any real-world value.

Many people that have been eerily accurate in the past are beating the drum for commodities right now. A couple of major points are that a) commodities have NEVER been as cheap vs. stocks as they are today, b) it appears that the price manipulation has made producing many commodities unprofitable- leading to less production. Great that the “skimmers” of society can trade paper products while they too produce NOTHING and impact companies and their employees by rigging prices. This has probably led to millions of lost jobs and possibly trillions in lost profits because of the market rigging by major banks. Of course, I am talking about commodities here but gold, silver, forex, you name it- you can be sure a major bank has been caught rigging it.

Just think about this. Many developed market bonds pay little to no interest. They provide little, if any, protection against inflation and in many cases CHARGE interest. Many investors and pension funds use these vehicles to create income and provide some level of stability versus stocks. As the trillions of currency units grow to tens of trillions and now hundreds of trillions how long will it be before many of these “managers” wake up and start buying gold in earnest? The central banks started buying record amounts 3 years ago. It is listed as a “riskless asset” on their balance sheet. Because of the manipulation- which they are likely behind- most people view gold as risky because they have been programmed to do so. In the meantime, those in the know have been buying record amounts of metals while trying to make sure Johnny lunch bucket doesn’t get the picture and provide competition for the asset which would lead to them having to pay more.

It appears to me that the risk/reward for stocks is as bad as I have ever seen it. The uncertainty around this election, the imploding economy, and the highest valuations in stocks of all time appear to be a toxic combination for anyone thinking about a long-term profit. The fact that the Fed is buying $4.5 trillion in junk bonds is an ominous sign to me also. I believe there will be major bankruptcies and the bondholders (Fed and friends) will likely own unencumbered companies after the debt for equity swap during bankruptcy.

Domestic bonds also appear to have dim long-term prospects also even though they are providing some stability and small gains in the short run here. As inflation picks up the bonds would become less attractive. If deflation takes place many would sincerely worry about the promises made by the debtor and many would likely sell which would hurt those prices also.

Real Estate, I believe, is in its last ascent for a while. It will recover but it appears that there will be a massive downside shortly. Shortly means that 40 million people are hanging on to their residences by a thread and the kindness of the government to them. Unfortunately, the government’s benevolence (because they have no money- they have to take it from somewhere) is at the expense of the mortgage companies and landlords who are still on the hook for their expenses. 2021 should be a banner year for foreclosures and evictions leading to crashing prices. I don’t pretend to be a real estate expert but I have been listening to experts like Robert Kiyosaki and Ken McElroy who are and they make compelling arguments. Commercial Real Estate REALLY looks bad- which could lead to the bargains of a lifetime.

Little old gold and silver are the only assets that don’t rely on someone else’s promise to pay. It is the ONLY asset that has served as money for 5000 years and stood the test of time. Even with all of the games being played to suppress the price it has outperformed the major US stock indexes by 4 times since the year 2000- but SHH! You can’t know that! Since 2000, the major US stock indexes are way down if measured vs gold instead of a rapidly declining US dollar.

Does your portfolio have the necessary ingredients to get through this and hopefully prosper or are you still keeping your fingers crossed that “the Fed has my back”? 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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