There really is no way for me to express just how stunning what we are seeing actually is.

The illusion of fake money is giving the illusion that things will return to normal as soon as those in charge decide to let the economy return to “normal”.  If it weren’t for the trillions of dollars- and many other currencies being conjured up out of nowhere- we would know RIGHT NOW that things are nowhere near normal. We would also likely know that a return to what we knew as normal would be a far-off thought and the good times just a distant memory.

As it has played out, the actual damage done by this lockdown has been postponed by massive interventions into markets and “money” being sent directly to consumers from the government and unemployment insurance.

While many are suffering shortages of food and basic necessities of life, like shelter, the majority are still fat and happy because they have been propped up with money from nowhere.  It appears that the American dream has turned into a slumber that many have been lulled into to just get by.

Not only are we peons getting money for nothing and checks for free (kind of like the old song!) but central banks, according to Deutsche Bank, have been buying $2.4 Billion of assets per hour for the last 8 weeks. Central Bank balance sheets have now gone beyond $20 TRILLION dollars. (Lenders, buyers and OWNERS of last resort- by design).

Actually, with the economy closed down and no velocity of money the Fed has a lot more runway to get going before we realize that they are debasing our “money” in an unprecedented way. All other currencies are also being debased and gold held down to advance the scheme further.

While demand has been propped up for goods and asset prices propped also, unless we get that V-shaped recovery ( a pipe dream in my opinion) demand for goods and services will collapse when stimulus money either stops or doesn’t provide enough of a boost to keep the consumer consuming. Another concerning aspect of this is that supply chains are being disrupted already.

I know that many are aware that the Fed has created $3.276 TRILLION out of thin air in the last few months. It appears A LOT MORE is coming. Since we can’t really visualize how large 3.2 Trillion is how about every taxpayer now owes $22,600.00 more than we did just a few months ago. (FRED)

Most of this “money” has gone to bail out banks and buy assets. Yes, you and I OWE another 22,600.00 each BUT the FED now owns another $2 plus trillion in ASSETS. See how that works?

The crumbs sent to the public are probably what those “in charge” decided they better do to keep the masses silent as they “print and buy” virtually all assets- up to and including cities and states. Mark my words- this is NOT a bail-out. It is a more likely a buy-out. As debts go bad the lender (Fed) will foreclose. This means companies, individuals, cities, states and possibly nations- if they are not stopped.

It is my opinion that this has gone too far and there is no way I can see to stop what is happening here. The only thing that I can think of is to do what the central banks are themselves doing. Of course, you and I cannot conjure up “money” out of nowhere and buy real assets- at least not without the threat of going to jail for a LONG time. So we could piggyback on bonds they are buying and propping up, we could buy stocks that we believe they will buy and prop up but the problem I see with that is that they could pull the rug out at any time. I am also sure that their owners at the banks would get advance warning and would likely be short while the rest of us get our heads handed to us yet again.

They are also, however, buying gold and silver. In addition, they are artificially suppressing the price so they can buy it cheap. This is the route I choose to go because I am buying what they are buying but instead of buying an artificially propped up asset, that I have to worry may collapse, I am actually buying along side of those who will also determine when the time will be right for these prices to go the other way- which would be higher.

Because of the unprecedented “printing and buying” I believe that the rally in the metals will be also unprecedented in history. I am also of the belief that when true prices expose themselves many will be shocked how little paper assets are actually worth. What is the price of an asset in a worthless currency?

Could it be that at some point a home that is worth $200,000.00 today could be worth $1 million in a few years because the currency is so badly damaged? I believe it is. What if the dollar is damaged so bad that gold is $100,000.00 per ounce? 10 ounces buys the house. Get the point?

Many may wonder why I am down on stocks at this point. Obviously, the Fed is keeping all stock and bond “markets” elevated. Even so, as the stock and bond prices rise the economy is dead. Companies are going deeper into debt to survive and a record amount of companies are massively reducing or suspending dividend payments. This is not healthy.

A few more “Not Healthy” signs include:
According to Barrons The 10 largest stocks in the NASDAQ Index have gained $900 Billion in market cap in this recent rally but the other 2600 companies have a combined LOSS of $300 billion. Top Heavy?

According to the Buffett Indicator (Stock Prices to GDP) stocks are at all-time record highs AND the GDP numbers are collapsing. Fake money can only keep fake prices high for so long.

Corporate bankruptcies are exploding along with mortgage forbearance, rent forbearance and late payments for credit cards, auto loans, etc. Not exactly signs that the “Consumer is strong”.

History shows that when you have a collapse like we had in March a dead cat bounce should be expected. From Bank of America: “Bear market rallies in 1929, 1938, 1974 saw average 61% rebound from lows (after average 49% drop) … would take S&P to 3180 in this rally.” What is not mentioned here is that the BIG drop comes AFTER the countertrend rally and the conditions that led to the countertrend rally were similar to what we are doing now to prop up markets- albeit nowhere near the scale of what we are seeing today.

“Somebody” sold $333 Million in a dark pool (There are 53 dark pools registered with the SEC where banks can do trades that escape investor scrutiny) of a Real Estate ETF. This wasn’t me or you. It appears that some insiders believe real estate has a LARGE problem coming. I believe those that are astute will be paying attention. Trade confirmed by Stefanie Kammerman, former trader at Schonfeld Securities on Zerohedge) Watch what they do- not what they say!

However, never forget- there WILL be a recovery. Those positioned correctly will likely be able to purchase assets they couldn’t imagine owning today. I believe we will see large moves likely starting in the fall and lasting at least throughout 2021. If keeping your fingers crossed I am wrong and that the Fed will, for the first time in recorded history, lead us to nirvana through debt, you may want to readjust your plans- JUST A BIT! History is not on your side.

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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