Another week- another 750,000+ first time unemployment claims. While this is a slight improvement over prior weeks it is still about 4x the average amount recorded prior to March of 2020. Many must be thinking “Super V- but not for me!”

Mainstream media and the shills in the government can tout the economy all they want but in the end people know what they see with their own eyes. Many know plenty of good people who can’t find a job and many others who are wondering if their prior jobs will ever return.

Many are still seeing many of their neighbors living in fear and not traveling or spending like they used to. (Don’t forget the US GDP is based 70% upon spending).

While certain sectors are making some hay the overall economy is, in my opinion, mortally wounded. It would take a miracle to get the economy back to 2019 levels in the next few years.

Even though those “in charge” are touting the over 30% increase in the last quarter in GDP let’s not forget the MASSIVE stimulus that it took to get that. A couple trillion here and a couple trillion there will certainly move the needle. Let’s also not forget that the second quarter GDP collapsed 31%- the most on record.

Let’s assume the GDP is 100. It collapses 31% in Quarter 2 to start Quarter 3 at 69. 69 X 1.3 (or 30% increase in Q3) gets us back to 89.7% of what was produced in the first quarter. While the 30% sounds impressive we would have had to have grown 45% to get back to ZERO growth.  This is with trillions of dollars and other fiat currencies being conjured up and assets being bought in unprecedented amounts.

The elephant in the room is, of course, the election that is coming up on Tuesday. Those that hold power I’m sure would like to keep it so the numbers are massaged for maximum impact right before we go and pull the lever. On the other hand, there are powerful forces out there who would like those in charge replaced and would like to see the “markets” crater before the election. We’ll know shortly!

My take on the election is that I believe that it appears that neither side will go peacefully into the night if they don’t win. This leads me to believe that there will be at least a bit of chaos after the election- particularly if there is no clear winner.

My expectations are:

  • If Biden wins I would expect a stock market rally based upon the idea of increased stimulus and spending going forward. If the Democrats take the senate this would likely be even more true. I believe the ultimate outcome would be the destruction of our currency, which will likely happen anyway, but it will be a lot quicker with Kamala as President. I also expect Biden will step down shortly- if not immediately after being sworn in. My father-in-law had dementia and I know what it looks like. He has it. I would expect gold and commodities to rally because of the same set of circumstances with silver likely leading the way.
  • If Trump wins I expect that those acting out on our city streets will likely take it up a notch and could lead to even more chaos than we have been seeing. This would not be good for the “markets” short-term because markets hate uncertainty and chaos. On the other hand, gold is an asset that is prized most when “money” is being “printed” into oblivion and when there is uncertainty and chaos. Check and check in this scenario.
  • An undetermined outcome … at least for a while. Sounds crazy? It may be the most likely outcome! Why? Because both sides are girding for war and MANY are saying that neither should concede even if it appears there is no way to win. I know at least in Pennsylvania you can get your ballot in up to 3 days late so unless there is an overwhelming victory-which appears unlikely at this time- it appears Pennsylvania could be in play for up to a week after November 3rd. In this situation, particularly if both sides clash both in the courts and on the streets you could see the metals really take off as those overseas will be watching our society go full-on banana republic. If you are a person of wealth, managing money or running a sovereign wealth fund how do you think they will view this in relation to the US dollar? Would it create an air of confidence or a search for a more stable store of value? The likelihood of a stock selloff even with the US dollar under pressure would, in my opinion, be greatly heightened in this scenario and the stars would likely be aligned for gold to make another run higher. Yes, even though it has risen over 20% in 2020 the rally has, in my opinion, just begun.

Regardless of the outcome of the election I believe we have long ago passed the point of no return as the money “printing” has, as I wrote it had to 10 years ago, gone parabolic as every intervention has to be larger and larger to get the same bang for the buck.

The time to be positioned is before an event takes place. The Great Wayne Gretzky always said that you never skate to the puck- you go to where the puck is going to be.

I really believe that those who keep chasing what worked in the recent past are in for a rude awakening.

It has been said that there are years when nothing happens and days when years happen. As the numbers keep getting exponentially larger the odds appear to me to be suggesting that a few of those days might just be right on the horizon. As always-

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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