The “markets” have been rallying lately after Fed Chairman Powell came out and said that the Fed would likely be getting less hawkish going forward. I would like to give a shout-out to Gregory Mannarino who does a bi-daily blog and who called this a month ago.

While the “markets” are rallying (or at least WERE yesterday and giving back today (12-1), the economic news could hardly be more dire.

Just a few tidbits from those “in charge”

  • Labor demand dropping HARD- mass layoffs are coming.
  • Pending home sales plunged the most in history last month.
  • Chicago PMI nosedives and ADP reports manufacturing jobs are cratering. That should be no surprise as S&P Global Manufacturing index is in outright contraction at 47.7. Any reading under 50 is falling. US ISM Manufacturing is also contracting at 49.
  • Yield curves are just coming off the most inverted in history also.

Keep in mind that an inverted yield curve generally forecasts a MAJOR slowdown ahead. I also believe that the only reason we are off of the most inverted yield curve in history is because the Fed and possibly (most likely) many other central banks are buying the government debt in quantities that we can’t even fathom.

Let’s remember that MANY countries, after seeing Russia’s reserves either frozen or stolen have been dumping US debt. As a matter of fact, most countries outside of Europe, Japan, USA and Australia are actively designing a competing system to overtake the use of the US dollar in global trade. They are WELL on their way. What this likely means is that the only buyer of US and developed world debt is likely to be the central banks of those areas.

Because of this, even though, based on the dismal economic numbers, Mr. Powell and the crew may believe enough damage has been done to kill demand that he can be dovish, it is likely that because they are “printing up” who knows how much to keep the illusion of liquidity and solvency alive prices will just continue to rise and could ultimately become uncontrollable.

We have to remember that no matter how much “money” is conjured up out of nowhere it produces NOTHING. This is the main reason why we may be seeing the end of the West’s dominance in the world right before our eyes. Anyone who doubts this consider this. We have been conjuring up cash and buying what we need with producing nothing more than a computer blip or a piece of paper. We have also been manipulating prices with the same mechanism. Russia has now alerted the rest of the world about the fraud that the West has perpetuated on the rest of the world by having a debt-based system that is so corrupt that even the “money” they conjure up out of nowhere to buy stuff and manipulate prices with are OWED BACK to the central banks WITH INTEREST. These guys make Ponzi and Madoff look benevolent.

Now imagine a world where resources are scarce and those that are actually producing those resources get together and trade amongst themselves with currencies that are backed by actual goods and are NOT a unit of debt- like the fiat (backed by nothing) western currencies. If you were producing those goods which way would you rather be paid?

It appears to me that the writing is on the wall and the only question is the timing. There are MANY reasons to believe we are VERY near a sea change.

  • Central Banks buying gold in record amounts for years but Q3 2022 most since 1967.
  • BIS (Central Bank of Central Banks) bought back 500 TONS OF GOLD recently
  • US dollar earlier in the year was in a parabolic move up and is now falling hard- possibly the VERY beginning of the end of the dominance not only of the US dollar but also the US overall. Keep in mind that EVERY SINGLE action taken by the west to undermine Russia has had the exact opposite effect and has weakened the West FAR more than it has hurt Russia. As a matter of fact, as we are sending munitions to Ukraine, WE are the ones being drained of military power far faster than Russia is.
  • These facts are not being lost on the rest of the world as most of South America, Africa, the Middle East and Asia ex-Japan and Australia are buying into the new BRICS,SCO and EAEU system. Even our most staunch allies in the Middle East like Saudi Arabia are looking to join. (Bye bye Petrodollar?)

These events, which have been in the works for a long time, appear to be coming to fruition in the very near future. The impact on our finances and prices could be immeasurable. While I have been expecting this for quite some time and many might look at me like the boy who cried wolf, I cannot overstate how concerned I am right now about those who have their heads in the sand and are just “holding on for the long term”. We just had a 40-year bubble in bonds likely burst so, as rates fell and asset prices rose for 40 years we are now likely on the other side of that hill. I believe that caution is warranted and that the most likely way to protect ourselves is with HARD assets and NOT DEBT instruments.

Personally, I believe that silver is likely the most undervalued asset on the planet and gold is not far behind. I also recently saw a chart that shows the metals miners are at the most undervalued price in relation to the metals prices of all time. (Buy low- Sell High!) Anything that needs to be produced and the companies that produce those goods are, in my opinion, worth a good hard look here.

Don’t listen to what central banks say- watch what they DO. Act accordingly.

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.

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.