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Pareto Principle Prices and Game Changers

Miles Franklin sponsored this article by Gary Christenson. The opinions are his and are not investment advice.

Breaking News:

  • Silver (COMEX) fell $0.86 on Friday, August 7, but still finished the week up $3.32.
  • Gold fell $40 on Friday but finished the week up $55.
  • The NASDAQ hit another new high at 11,010.
  • Democrats and Republicans continued fighting about spending dollars they don’t have on giveaways to Wall Street, corporations, cities, states, and individuals. The Federal Reserve will create the giveaway dollars from “thin air” in their successful efforts to transfer assets from the many to the few.
  • Grocery prices rose. More workers filed for unemployment benefits. GDP fell a record amount. Official national debt rose to $26.5 trillion, not quite $100,000 per person. The US government will default on that debt or will repay with hyper-inflated dollars. The Fed prefers hyper-inflation but will not say so. Good times ahead…

The Pareto Principle:

The Pareto Principle is an observation, not a mathematical theorem. It rose from the perception that 80% of Italy’s wealth belonged to 20% of the population.

The 80/20 rule applies in other areas where the distribution of wealth, income, assets, mischief, and nonsense are not equal.

Examples:

  • 20% of workers create 80% of production.
  • 20% of bureaucrats create 80% of the “red tape.”
  • A market often takes 20% of time to achieve 80% of the price increase.
  • 20% of congress receives 80% of the payoffs.

The Pareto Principle as applied to markets:

Examine the charts of Gold, Silver, Apple, Tesla, and the NASDAQ 100, and note the positions marked 1 – 4.

  1. A major low in price.
  2. An important high in price.
  3. Regaining that high after a correction.
  4. Final high price.

Gold’s bubble ending January 1980:

From low to initial high, gold prices rose $160 in 1,234 days. After regaining that high, gold prices moved $673 in 546 days. 81% of the price rise occurred in 31% of the time. It was an unequal distribution.

Gold’s rally ending August 2011:

From low to initial high, gold prices rose $764 in 3,164 days. After regaining that high, gold prices moved $906 in 693 days. 54% of the price rise occurred in 18% of the time.

Silver’s bubble ending January 1980:

From low to initial high, silver prices rose $5.04 in 1,234 days. After regaining that high, silver prices moved $43.57 in 364 days. 89% of the price rise occurred in 28% of the time. Silver rallies faster than gold, so the larger percentage rise makes sense.

Silver’s rally ending April 2011:

From low to initial high, silver prices rose $16.93 in 2,303 days. After regaining that high, silver prices moved $27.56 in 224 days. 62% of the price rise occurred in 9% of the time.

Thoughts: A blow-off rally in gold or silver will follow, more or less, the 80/20 principle. Expect most of the final price rise in a short time – boring, boring, boring, and then heart-attack exciting.

WHAT ABOUT STOCKS IN A BLOW-OFF RALLY?

Apple stock sold for less than a buck in 2003. It began a blow-off rally in May 2016 from $84 and reached $456 in August 2020. Tesla stock sold for $35 in 2013. It began a blow-off rally in February 2016 at $141 and reached $1,795 on July 17, 2020.

True believers think these rallies in tech stocks have much further to go—new highs are coming, and prices can’t fall much. Count me OUT of that group.

Apple’s runup ending (so far) August 2020:

From low to initial high, Apple stock prices rose $143 in 875 days. After regaining that high, Apple prices moved $229 in 308 days. 62% of the price rise occurred in 26% of the time.

Tesla’s runup ending (so far) July 2020:

From low to initial high, Tesla stock prices rose $246 in 504 days. After regaining that high, Tesla prices moved $1,408 in 210 days. 85% of the price rise occurred in 29% of the time.

Tesla stock prices experienced a larger blow-off rally than Apple. The percentage move was larger and occurred in a similar amount of time.

For the NASDAQ 100 runup in 1999 – 2000:

The NASDAQ 100 Index achieved 75% of its 1999—2000 bubble rally in 27% of the time. And then fell 80+% in a crash…

SO WHAT?

Prices for silver and gold rose rapidly for several months during 2020, a mild version of their December—January 1980 bubble rally, and their 2011 rallies.

Their prices will rally much further but are likely to correct first. Technically, gold and silver prices have moved too far, too fast. They are over-bought and due for a correction. Might happen soon, might not.

But suppose gold prices peaked at $2,058 and silver prices peaked at $28.40 in August 2020. Suppose they correct, as markets must correct, back to lower support. Assume after correction, they surpass their August highs around April 2021. This is speculative, but the disastrous consequences of election year politics, pandemic shutdown, Federal Reserve “printing” under their QE4ever policies, and dollar devaluations are not speculative.

Suppose that gold and silver prices rally substantially in 2021 and 2022, after more Fed “printing” and a panic into real money when hedge funds, investors, and central banks tire of perpetual dollar devaluations, inflationary policies, and monetary nonsense.

Suppose gold rallies to $6,000 in August of 2022 and silver rallies to $90 at the same time. Given that speculation, the gold rally, after regaining its $2,058 high, would create 79% of the rally in 22% of the time.

Suppose silver rallies to $90 in August of 2022. That rally would be 82% in 22% of the time.

Will gold prices rally to $6,000 and silver prices rally to $90? Yes, they will, unless the Fed stops “printing,” crashes the economy into a deflationary depression, and the U.S. government balances the budget. Winning the Powerball Lottery is more likely. The issue is WHEN gold and silver reach higher highs, not will they reach higher prices.

Another Projection to $6,000 Gold!

QUESTIONS:

  • Who predicted over 50,000,000 Americans would apply for unemployment benefits within a few months?
  • Who predicted the Fed would add $3 trillion to its balance sheet in a few months?
  • Who predicted Mayors and Governors would “lock-down” citizens and crash their own economies? Are they hoping to create a Democratic sweep in the November elections so they can collect multi-trillion-dollar bailouts to fix their budgets and pension funds?
  • Who predicted a $5 trillion deficit (or more) in 2020?
  • Given those unlikely occurrences, does $6,000 gold seem unlikely?

Thoughts from H. L. Mencken:

“There is no idea so stupid that you can’t find a professor [or politician] who will believe it.”

Read: Martenson on the Endgame.

GAMECHANGERS:

a) Per David Schectman, the following are game changers regarding the prices for gold and silver.The BIS reclassified gold as a Tier 1 asset as of March 29, 2019. (Central banks are buying gold.)

b) The U.S. dollar is [slowly] losing its status as the global reserve currency.

c) COMEX gold and silver longs are standing for delivery instead of rolling over positions.

d) JPMorgan is no longer short gold or silver.

Those “game changers” will boost the prices for gold and silver. Add the hyper-inflationary consequences of massive dollar “printing” and $6,000 to $10,000 gold should be easy to comprehend.

If those hyper-inflationary actions occur, Apple stock might sell for $1,000 or more and Tesla stock… well who knows?

CONCLUSIONS:

  • Markets blow-off higher and often make most of their price moves in a short time.
  • Commodities, individual stocks, Indexes, and real estate prices, when they bubble higher, follow this pattern. The crashes, after the unsustainable blow-off rallies, often experience 80% of the correction in 20% of the time.
  • Stocks rallyied for over a decade. Tech stocks are extreme examples. Gold and silver are inexpensive compared to total debt, national debt, M2, the S&P 500 Index, and the NASDAQ 100 index (see earlier articles).
  • Gold and silver have big rallies ahead. Tesla and Apple… maybe not.
  • Unless you trust congress, the administration, and the Federal Reserve to “have your back” and trust they will “take care of you” more than congress will pay off corporations that have “contributed,” buy gold and silver.

Miles Franklin sells gold and silver. Be advised that the supply is diminishing, and premiums have risen. Call 1-800-822-8080.

Gary Christenson

Walking the Line and Failing the Test

Miles Franklin sponsored this article by Gary Christenson. The opinions are his and are not investment advice.

Breaking News for July 31, 2020:

  • The NASDAQ composite closed at 10,745, near a record.
  • The DOW closed at 26,428, about 3,000 below its February high.
  • Gold closed at $1,962, up $65 for the week at a new closing record.
  • Silver closed at $24.21, up $1.36 for the week to a seven-year high, but well below all-time highs.

“Walking the line.” What could that mean?

a) Behaving in an appropriate manner while exercising self-control.

b) Maintaining an intermediate position between contrasting choices.

c) Healthy, self-sustaining, responsible choices made in moderation.

“Walking the line” to make wise economic decisions.

  1. Individual, business, and government revenues exceed expenditures while avoiding debt.
  2. Evaluate and predict economic consequences BEFORE making important decisions.
  3. Make wise expenditures that support self-sustaining businesses and programs.
  4. Act in moderation to support healthy and productive decisions, rather than encouraging negative, unproductive, and dependent decisions.

HOW ARE WE DOING?

  1. The U.S. national debt exceeds $26.5 trillion. On January 1, 2000, it was $5.7 trillion. Conclusion—The U.S. government has had irresponsible management for decades. Much misery is coming as the consequences unfold.
  2. The pandemic shutdown has saved lives, according to the media. It has also created millions of unemployed workers, a tsunami of individual and business bankruptcies, and prevented millions of people from paying rent, mortgage payments, and credit card debts. Government revenues have plummeted, and pension plans are more insolvent than before the shutdown. Did the “powers-that-be” (PTB) consider the alternatives and consequences BEFORE they chose to “save lives at any cost?” Conclusion—Either the PTB wanted to crash the economy, or they weren’t thinking, or both.
  3. Does spending $trillions on governmental programs make sense? Is it wise to pretend $26.5 trillion in national debt is unimportant? Are the $trillions spent on welfare and warfare creating self-sustaining revenues, or are those $ trillions flushed down the drain? Are governments and economies improved by massive debt, crony capitalism, and huge give-away programs? These programs eventually make the wealthy even wealthier and increase the cost of living for the poor and middle class. But a higher cost of living while millions are unemployed during an economic recession/depression will be a disaster. Conclusion—the PTB may benefit, but others will lose purchasing power, homes, credit and savings.
  4. Are bailouts creating dependence for citizens, corporations, and local governments? At the end of July 2020, many people and businesses are dependent upon “printing” by The Fed and “helicopter money” checks from the government paid directly to citizens. However, the Fed can’t create wealth, prosperity, jobs, food, or energy. “Printing” fake money may partially replace revenues destroyed by the “shutdown,” but it does not create jobs or sustainable businesses.

From John Rubino:

“… there is no end in sight for the massive money printing around the world.”

“… the world is on the verge of spinning out of control.”

“The reason why so many groups are so angry right now is because the system no longer works for most people.”

Mt. Printmore

The Fed can print, but they are encouraging unhealthy decisions. 

IS ANYONE SURPRISED THAT AN UNSUSTAINABLE FINANCIAL SYSTEM IS CRASHING?

From Bill Holter:All roads lead to gold.”

COVID-19 provided a convenient excuse to crash the economy. It happened during an election year. Attributed to FDR: “In politics nothing happens by accident. If it happens, you can bet it was planned that way.” Whether he said those words, they ring true about the “shutdown.”

WHAT CAN WE DO TO PROTECT SAVINGS AND RETIREMENTS?

1. Recognize that central banks and the banking cartel will create more fake money and devalue the dollar further.

  1. Buy stocks that will skyrocket. Apple sold for $10 in 2009, it closed July at $425. What will be the next Apple success story? Oops, that is the problem.
  2. Realize that the financial system depends upon increasing debt, higher prices for stocks, bonds, and consumer necessities. Protect investments. Oil sold for $17 in 2001, peaked at $147 in 2008, and is $40 now. Picking winners can be difficult.
  3. Stick with real money that has survived several millennia – gold and silver. Silver sold for $4.01 in 2001 and closed July at $24.21. Gold sold for $260 in 2001 and closed July at $1,962, a monthly closing high.
  4. If you had bought silver anytime after 1990, the minimum increase would have been 320%.
  5. If you had bought gold anytime after 1990, the minimum increase would have been 350%.
  6. Gold and silver have not bubbled into the stratosphere like Apple or Tesla stocks, but they have preserved purchasing power and appreciated. The people who lost 50—90% of their portfolio after the 2000 crash would be pleased if they had purchased silver under $5 in 1999 instead of most Internet stocks.
  7. Those who lost in the real estate crash of 2007—08 would envy those who bought silver in 2005 at under $7.

Will Silver and Gold Rise Higher? Consider:

8. Every market corrects, even tech stocks. Silver and gold will correct, bottom, and then rise higher.

Jim Rickards: “I would put [gold] at $15,000 an ounce before 2025.”

  • Will the Fed stop “printing” fake money? Will the Fed abandon QE4ever? Will the Fed apologize for actions that enrich the upper 1%? NO! Expect higher metals prices.
  • Will congress become fiscally responsible and balance the budget? Are congresspersons refusing massive cash donations? Will you win the Powerball Lottery this week? NO! Buy silver.
  • As the Fed and the banking cartel increase currency in circulation by borrowing Federal Reserve Notes (debts) into existence, they devalue existing dollars. Gold, silver, and stocks rise as dollars buy less. But stocks are high in 2020 and silver is not.

Yes, gold and silver will rise much higher. Expect gold at $3,000 to $20,000 depending upon how much fake money is printed. Expect silver at $50 to $500 depending on “printing.” What will a cup of coffee cost when silver costs $100 per ounce? Will gasoline sell for $10 or $30 per gallon? These high prices are the consequences of QE4ever, fiscally irresponsible government, and fractional reserve banking.

From Jim Rickards:

“Governments have shuttered America’s restaurants, ale houses, barber shops, nail salons, gymnasiums, arenas, beaches… and all places of public resort.

“Governments have ordered churches to scatter their flocks – and bolt their doors.

“Yet the same governments that barred you from your sister’s funeral, that locked you out of Sunday service… have blessed the mightiest mass gatherings we have ever encountered.

“We refer of course to the George Floyd protests.” [Why?]

Gross Domestic Product is NOT a perfect measure of economic activity, but is widely used. Does this chart suggest “money printing” by the Fed will increase?

The NASDAQ composite is near all-time highs. Do you believe it is a good representation of the overall economy, or is the GDP graph a better measure? We’ll know in a few months.

WALK THE LINE TOWARD RESPONSIBLE ECONOMIC DECISIONS.

  1. The Fed and other central banks may not return to a gold backed monetary system in the foreseeable future, but individuals can. Buy gold.
  2. Silver is undervalued compared to debt, M2, the Dow, the NASDAQ, gold, and congressional irresponsibility. Buy silver.
  3. The NASDAQ may make new highs but remember the crash in 2000. Following the peak, the NASDAQ 100 fell over 80%. It is a bubble as big as 2000 and could happen again.
  4. Apple stock rose to $425 on July 31. Everyone loves Apple, but is it worth that bubblicious price? In my opinion, silver is over-bought and due to correct, but it looks like a far better choice than Apple for the next year.
  1. Evaluate Risk and reward choices. Is a bet on larger debt, continued spending, economic stupidity, and crony politics a solid bet? Yes, of course. In that case, insurance policies in the form of silver and gold bullion are solid bets.

Miles Franklin sells gold and silver. They don’t print fake money, promote over-valued NASDAQ stocks, or pretend to influence congress. Call them at 1-800-822-8080 to protect your assets from the denizens of Mt. Printmore and other central bankers.

Gary Christenson

Silver Breaks Out – Over-Bought Territory

Miles Franklin sponsored this article by Gary Christenson. The opinions are his and are not investment advice.

Breaking News:

  • Silver prices on the COMEX closed up $3.08 at $22.85 for the week. For perspective, prices dropped below $12 on March 20 of this year.
  • Gold prices closed up $87.50 to close the week at $1,897.50, near an all-time high.
  • The NASDAQ closed down 140 at 10,363. The price peak, so far, occurred on July 21.

Silver and gold prices had a banner week during which silver rose by 15%. Why did silver prices rise so much since March 20? Answers that come to mind are:

a) QE4ever is devaluing existing dollars. The process has not reached WARP speed, but investors have noticed. Prediction: QE4ever will continue devaluing the dollar.

b) Short covering by bullion banks and others. Selling short, driving prices down, and buying back at lower prices has been profitable for years. Perhaps short sales failed during our “shutdown” economy.

c) Silver miners closed operations because of COVID-19. Supply diminished.

d) Demand is strong. Do you want your savings in guaranteed to devalue dollars/euros/pounds that pay next to zero interest, or something real like silver? Premiums on silver coins are high. Demand increased.

e) Depression era unemployment numbers and never-to-reopen businesses worry people that a financial panic is coming. Experience shows that an early panic into silver and gold is preferable to a later “get me out at any price” panic out of paper assets.

f) Has the Fed lost control? The Fed can print dollars, but can’t create jobs, wealth, reopen businesses, supply gold, mine silver, or ease fears that disastrous consequences lie ahead. Worry and fear encourage gold and silver prices.

g) The price of silver and gold is, by some estimates, the inverse of confidence that central banks will manage the economy and our “shutdown” crisis. Central banks will make a mess of it.

h) Election year promises. What if the wacky promises by both parties are implemented? Prediction: More debt, promises, economic nonsense, and higher silver prices.

I) A Wealth Tax: Instead of managing spending, governments may implement a wealth tax. Will enough loopholes be written into the law to protect the top 1%? When will a wealth tax extend to the middle class? Individuals worried about a wealth tax may be converting paper assets into less visible gold and silver.

j) Political party XXX will increase debt, social programs, wars, and economic nonsense. The dollar will adjust lower. Silver and gold will protect savings and retirements.

k) Political party YYY will increase debt, social programs, wars, and economic nonsense. The dollar will adjust lower and boost the prices for gold and silver.

l) A banking crisis might occur as banks discover unemployed workers can’t pay their bills. Add bankruptcies in shale oil companies and failing commercial real estate investments. Top with the collapse of “brick and mortar” retail sales and multiple bankruptcies. Stir a derivative crisis into this “witches brew” of economic disasters. The banks may be healthy (I doubt it), but serious risk lurks under the surface. Think 2007-08.

m) The Fed can “print” to save the stock and bond markets but will collapse the dollar. Are the euro and pound stronger?

n) Will the government subsidize cities, states, and their pension plans? What about corporate pension plans that are insolvent? Bailouts will be expensive.

o) Add your favorite concerns.

From John Mauldin:

The world is getting ready to be repriced. Everything is going to seek a new value. Real estate, stocks, commodities, food, medical costs, college costs, government, entertainment, sporting events, clothes… Everything.”

REVIEW:

  • Dollars are issued as debts of the Federal Reserve. The days when dollars were real money or backed by gold or silver are long gone.
  • The banking cartel borrows into existence new dollars and expands debt more rapidly than the economy grows. Dollars are thereby devalued, and prices rise.
  • The Fed “prints” via QE4ever and other programs. New dollars are created, not from production, but from Fed “printing.” Those new dollars devalue existing dollars and prices rise.
  • Global central banks have “printed” $25 trillion in “fake money” and levitated global bond and stock markets. The consequences of “fake money” are coming. Prediction: We’ll see stagflation, higher consumer prices, much higher silver prices, and negative growth. Neither the Fed nor our government nor economists will accept responsibility for the stagflation they created. Prediction: They will look for and find scapegoats and diversions.
  • Devalued dollars buy less, and consumer prices rise. Prediction: Commodity prices are low compared to prices for paper assets. Commodity prices will rise faster in coming years.
  • Silver and gold prices rise as the banking cartel devalues dollars. A short-term correction may occur, but much higher prices for precious metals are coming.

OVER 100 YEARS AGO:

The Fed was legislated into existence in 1913 to make the banking establishment more profitable. In 1913 we paid less for necessities:

New truck $600 then, $50,000 – $80,000 now.

Potatoes $0.016 then, $2.50 now.

Cigarettes $0.10 then, $6.00 – $10.00 now.

Bread $0.05 then, $3.00 – $6.00 now.

Creating trillions in fake money makes everything more expensive.

WHY DO WE ACCEPT THIS DEVALUATION PROCESS?

a) We feel wealthier when income and assets appear larger. It’s a comforting delusion. How many loaves of bread will our current income purchase? Probably less than in 1971.

b) We have (delusional) faith that the Fed will manage the economy and the value of the dollar. We don’t believe “the piper must be paid.”

c) Name three congresspersons who want to manage expenditures and debt. Prediction: The U.S. government will spend more every year until something drastic occurs.

d) The politicians and the Fed are in charge. The rest of us ride along and must accept what they create.

As debt increases, dollars buy less and silver costs more. Look at five decades of Total Credit Market Debt Outstanding per the St. Louis Fed and compare to (five period moving average) quarterly silver prices.

It’s the same story with the S&P 500 Index.

But the ratio of silver to the S&P is important. That ratio shows, even after its rise since March, silver is undervalued compared to the S&P.

Prediction: Silver will correct from its current “over-bought” condition, maybe this week or next month, but it will correct and then rally far higher through 2025.

The last two runups in silver occurred in 1979-1980 and 2010—2011. In both cases, silver prices stopped at about $50 before they were forced lower. In 1980, people stood in long lines outside of coin dealers to exchange devaluing paper dollars for real silver.

In 2011, silver prices almost reached $50 before crashing again. The subsequent low was $13.61 in December 2015.

Crashes are not new. Remember the “nifty 50” decades ago, gold in 1980, stocks in 1987, the Nikkei in 1990, the NASDAQ in 2000, real estate in 2007, and Tesla in 2020—oops that crash hasn’t happened yet.

Read and Listen:  Bill Holter: “All Roads Lead to Gold in a Credit Implosion.”

CONCLUSIONS:

  • The Fed can’t create wealth, prosperity, jobs, economic strength, or necessary commodities. They can “print” trillions in digital dollars, so expect them to print, print, print. Dollars will devalue and prices will rise.
  • Stagflation, which is rising prices during a sluggish economy, is a reasonable expectation.
  • Failed economic policies, excessive debt, too much spending, Fed actions, corruption, and greed would have crashed the economy, eventually. Instead, insiders used the COVID-19, pandemic, and the “shutdown” to torpedo the economy, destroy businesses, increase bankruptcies, create fear, and generate anxiety. And it happened in an election year. What a surprise!
  • Total Credit Market Debt increases every year. Silver prices rise (erratically) along with debt.
  • The S&P will rise along with debt.
  • In July 2020, even after it has nearly doubled in four months, silver remains undervalued compared to the S&P 500 Index.
  • Silver at $50, and then much higher, is coming. Most “crystal balls” are cloudy, but within one to five years is reasonable.
  • Government and The Fed will not voluntarily relinquish power, control, and insider wealth. Expect the dollar to devalue further and commodity prices to rise much higher.

Miles Franklin sells silver and gold—real money the Fed can’t manufacture with computer strokes. Precious metals have no counter-party risk, which will become important as bankruptcy fever strikes the economy. Call them at 1-800-822-8080.

Gary Christenson

Russian Roulette – The Currency Version

Miles Franklin sponsored this article by Gary Christenson. The opinions are his and are not investment advice.

Breaking News:

  • Gold closed on July 17 at $1,810.
  • Silver closed at $19.76
  • Tesla stock spiked to $1,795 and closed at $1,501.
  • The S&P 500 Index peaked at 3,393 on Feb. 19, crashed, and hit a second peak at 3,233 on June 8. It closed on July 17 at 3,225.

Russian Roulette is a “game.” Insert one .44 magnum cartridge into your six-shot revolver, spin chamber, and point at your head. Your temple, forehead, eye socket or under your chin will work. Pull trigger. Probability of survival after one trigger pull is 83%.

Spin the chamber after each trigger pull and pull trigger five more times. Probability of survival after six independent trigger pulls is 33%.

Why would anyone play this game? The result, after enough attempts, is clear—death.

Another example: Every unbacked currency in history has failed, inflated into worthlessness—eventually. Stretching the analogy, one might say that after enough monetary trigger pulls, every currency dies unless it is real money—gold—or backed by gold. Unfortunately, the U.S. severed the last gold connection to the dollar in 1971. President Nixon “pulled the trigger.”

Why would any country play this game? Guaranteed destruction of the currency is an ugly consequence of fiscal and monetary irresponsibility. Yet central banks and governments “pull the trigger” many times.

The result is devaluation of the currency. Price of gold in dollars in 1971 was $41. Price of gold in mini dollars in 2020 is $1,810. Price of gold in 2030 in micro-dollars could be $5,000 or $25,000 or $50,000. That price depends upon how many times the Fed “pulls the trigger” in their devaluations.

Possible reasons why the U.S. plays “Russian Roulette” with its dollar: It can’t happen here. We are special. It extracts wealth from the many and transfers it to the few. No knowledge of history. This time will be different.

Russian Roulette—the expanded game:

Phase Two: Place two .44 magnum cartridges in your handgun, spin the cylinder each time, and pull the trigger six times. Probability of survival is 8.8%.

Analogy: Severing the last connection between gold and the dollar was the first bullet. Allowing deficit spending, fractional reserve banking, debt, warfare, and welfare to expand “out of control” was the second bullet.

Phase Three: Place three .44 magnum cartridges in your handgun, spin cylinder each time, and pull trigger six times. Probability of survival is 1.6%.

Analogy: Add the “third bullet” to the destructive arsenal. Lower interest rates to stimulate growth of debt and encourage a bubble in Internet stocks during 1996 – 2000. This resulted in a nasty crash that hurt many people in the bottom 90%.

Phase Four: Place four .44 magnum cartridges in your handgun, spin cylinder each time, and pull trigger six times. Probability of survival is 0.14%.

Analogy: Add the “fourth bullet” to the Federal Reserve policies, inflate a real estate bubble and smaller stock market bubble. This resulted in a nasty crash that created millions of foreclosures and untold misery.

Governments and central banks didn’t learn from the experience or ignored the lessons and inflated more bubbles.

Phase Five: Place five .44 magnum cartridges in your handgun. Spin cylinder each time and pull trigger six times, if necessary. Probability of survival is 0.002%.

Analogy: Add the “fifth bullet” to the Federal Reserve policies, instigate QE4ever in various forms, inflate the “everything bubble” and watch as the stock markets bubble higher and dollars devalue.

Results of the “fifth bullet” choices are;

  • Tesla stock sold for $351 in March of this year and hit $1,795 this week. It could go higher if the Fed pumps more “air” into the bubble.
  • Apple stock sold for $10 in 2009, closed at $385 on July 17. Central banks create their currencies from “thin air,” convert into dollars, and buy Apple stock. Impressive results.
  • Amazon stock sold for $35 in 2008, closed at $2,961 on July 17. Hmmmm.

Russian Roulette—the expanded game:

Phase Two: Place two .44 magnum cartridges in your handgun, spin the cylinder each time, and pull the trigger six times. Probability of survival is 8.8%.

Analogy: Severing the last connection between gold and the dollar was the first bullet. Allowing deficit spending, fractional reserve banking, debt, warfare, and welfare to expand “out of control” was the second bullet.

Phase Three: Place three .44 magnum cartridges in your handgun, spin cylinder each time, and pull trigger six times. Probability of survival is 1.6%.

Analogy: Add the “third bullet” to the destructive arsenal. Lower interest rates to stimulate growth of debt and encourage a bubble in Internet stocks during 1996 – 2000. This resulted in a nasty crash that hurt many people in the bottom 90%.

Phase Four: Place four .44 magnum cartridges in your handgun, spin cylinder each time, and pull trigger six times. Probability of survival is 0.14%.

Analogy: Add the “fourth bullet” to the Federal Reserve policies, inflate a real estate bubble and smaller stock market bubble. This resulted in a nasty crash that created millions of foreclosures and untold misery.

Governments and central banks didn’t learn from the experience or ignored the lessons and inflated more bubbles.

Phase Five: Place five .44 magnum cartridges in your handgun. Spin cylinder each time and pull trigger six times, if necessary. Probability of survival is 0.002%.

Analogy: Add the “fifth bullet” to the Federal Reserve policies, instigate QE4ever in various forms, inflate the “everything bubble” and watch as the stock markets bubble higher and dollars devalue.

Results of the “fifth bullet” choices are;

  • Tesla stock sold for $351 in March of this year and hit $1,795 this week. It could go higher if the Fed pumps more “air” into the bubble.
  • Apple stock sold for $10 in 2009, closed at $385 on July 17. Central banks create their currencies from “thin air,” convert into dollars, and buy Apple stock. Impressive results.
  • Amazon stock sold for $35 in 2008, closed at $2,961 on July 17. Hmmmm.
  • The NASDAQ 100 index measured less than 1,050 in 2008, and closed at 10,645 on July 17, down slightly from July 10. Bubble!
  • The NASDAQ 100 index measured less than 1,050 in 2008, and closed at 10,645 on July 17, down slightly from July 10. Bubble!
  • But the DOW, S&P 500, FTSE, DAX, NYSE, Nikkei, and most other indexes remain below their February (pre-lockdown) highs.

Phase Six: Place six .44 magnum cartridges in your handgun. Spin cylinder and pull trigger. Probability of survival is zero. A second spin is unnecessary.

Analogy: Initiate Project Pandemic and Operation Lockdown. Expand national debt by trillions of dollars in a few months, unemployment claims skyrocket to unbelievable numbers, large and small businesses fail, and bankruptcy courts are overwhelmed. Graft and corruption catch a bid, political maneuvering rules, and… what a shock… it happens in an election year.

Phase Six will have dire economic consequences for many years, most of which have not yet materialized. Watch and wait for an update.

REPEAT QUESTION: Why would any country pass laws that encourage the destruction of the currency via continual devaluation? Were “payoffs” involved? These policies transferred wealth from the many to the few. The transfer accelerated post-1971.

Consider the wealth effect as showed by the following graph. The economic version of Russian Roulette created this wealth and income imbalance.

WHAT IF WE DON’T HAVE SENATORS AND CENTRAL BANKERS ON SPEED-DIAL?

  • Recognize the game is fixed. “They” have created excessive debt and devalued the currency. Stocks, real estate, silver, and gold prices rose as dollars bought less.
  • Protect savings and retirements with silver, gold, and hard assets.
  • Speculate on mining stocks with risk money.
  • Be careful with tech stocks after an eleven-year blow-off bubble in prices. A transition from digital stocks to real money—gold and silver bullion—makes sense when gold and silver are inexpensive relative to stocks, M2, national debt, and total debt. Read: A Long and Perilous Journey.

Listen to: Andy Schectman – COMEX Silver Deliveries

CONCLUSIONS:

  • Plan for the worst—think many Russian Roulette spins with three .44 magnum rounds in the chamber. Hope for the best but hedge your hopes with physical silver and gold bullion in safe, non-bank, storage.
  • It is an election year. The political war and geopolitical maneuvering are intensifying. Expect more debt, bankruptcies, unemployment, and violence.
  • Protect your assets with real money that can’t be “printed” by corrupt central banks and insolvent governments.

Call Miles Franklin at 1-800-822-8080. They source silver and gold bullion to “insure” your assets. Like toilet paper, coins, hand sanitizer, aluminum cans, and meat, gold and silver may become difficult to find in the coming years.

Gary Christenson

Hammers and Nails and Golden Vaccines

Miles Franklin sponsored this article by Gary Christenson. The opinions are his and are not investment advice.

Things appeared normal, and then everything changed…

Breaking News:  The DOW rose 2,463 for the week ending March 27. It looks like a bottom, but for how long? COMEX gold rose $140 and silver rallied $2.15 for the week, while bullion and coins spiked higher. Politicians passed a coronavirus stimulus bill that includes bailouts and support for individuals and businesses. Reportedly the bill was 1,000 pages long and no member of congress read it. Our political process in action…

U.S. COVID-19 official cases on March 7: 338.

U.S. COVID-19 official cases on March 28, three weeks later: over 120,000. Exponential growth in sickness, debt, and expenditures are “killers.”

The economic, emotional, and physical scars from the virus will torture us for a long time. Disneyland and Disneyworld are closed indefinitely.

Meanwhile, back at the Eccles Building in D.C., politicians at the FED accelerated digital “printing” of dollars to WARP (Wacky, Arrogant, Ridiculous, Preposterous) speed. QE4ever pushed The Fed balance sheet beyond $5 trillion, up $900 billion in a few months.

Someone, somewhere, probably claimed that Fed and congressional intrusions into the economy were beneficial. We’ll see…

THE NEWER NORMAL:

  • In 1941, the United States entered WWII. We descended into a global war, and life for millions of people changed.
  • In 1964, President Johnson escalated the U.S. into the Vietnam War via the “Gulf of Tonkin Incident.” Our world was forever changed.
  • In 1971 President Nixon torpedoed the US economy by separating gold from the dollar, allowing the dollar and other fiat currencies to collapse, and inflation to skyrocket. Debt, government expenditures and financialization expanded exponentially.
  • In 2000, the Internet Bubble burst and destroyed savings, retirement accounts and dreams. Many did not recover.
  • After 9-11, the world was more dangerous, and governments became increasingly intrusive.
  • After the virus catastrophe of early 2020, the world became… The Newer Normal.

The Newer Normal in our post virus experience includes isolation, recession, depression, unemployment, business failures, personal bankruptcies, and never-ending Fed and government bailouts. The world changed in early 2020, as it did after 1941, 1964, 1971, and 2001.

HAMMERS AND NAILS:

When your only tool is a hammer, everything looks like a nail.

The Fed’s tools are interest rate policy and monetization of bonds—QE4ever. The economy will be hammered with low rates (already happened) and Fed purchases of Treasury debt, mortgage-backed securities and other debt.

THE NEWER NORMAL AND VACCINES:

Gargantuan debt. Our $23 trillion in national debt will explode higher. $30 trillion is coming soon.

A Fed balance sheet of $10 trillion. Central bankers might claim the first $5 trillion is the hardest. The next $5 trillion will soon be “printed.” Government will spend, and the Fed will monetize.

Growing realization: Creating $5 trillion was easy. One should ask, what will the next $5 trillion be worth? A virus can destroy people’s confidence, and printing can weaken confidence in the purchasing power of dollars.

Rescue: The Fed will “print” to rescue stocks and bonds. They will sacrifice the dollar’s purchasing power.

Shortages: Gold and silver dealers are mostly sold out, and the economic crisis is only beginning. Mines will close, people will panic to escape increasingly worthless dollars and want real assets. Supply will fall, demand will rise. Premiums over spot prices (COMEX paper prices) are at or near the highest in history. Higher spot prices and much larger prices for real coins and bars are inevitable.

Confidence and credibility: The Fed lost credibility. People are unhappy with government officials, hospital costs, the CDC, and congress. Fear, lost jobs, deaths, foreclosures, and bankruptcies make it worse. Government checks will buy time, but not enough.

Vaccines: A vaccine for COVID-19 will be immensely profitable for “Big Pharma” so it will become available. But a vaccine to counter the disease of central banking is available now! We call it GOLD!

MMT (AKA Magic Money Tree) economic theories, UBI (Universal Basic Income), continuous bailouts, and hyperinflation are “on-deck” waiting for their opportunity to remake our economy.

Craziness:

Singapore is set to punish people who stand too close to strangers with 6 months in prison…”

Blaming Others:

It’s all Trump’s fault because she thought it was ‘safe’ to go ahead with Mardi Gras which likely infected hundreds…” From the Mayor of New Orleans.

From Bill Bonner:

There’s no natural calamity that the feds can’t make worse.”

Read:

Schectman: “You Will Not Understand the Future.”

Christenson: “The Four Horsemen of the Apocalypse.

CONCLUSIONS:

We have transitioned into a Newer Normal, as happened after Pearl Harbor, Nixon’s decree in 1971, and 2001.

The Fed can buy bonds, do QE4ever, and drop interest rates, but they can’t fix structural problems, lack of supply, decreased demand, and viral infections. Read: “The Fed Can’t Fix What’s Broken.”

Printing dollars does NOT create wealth. Printing dollars creates mal-investments and inflation.

Governments will bail out individuals and businesses. More debt will be heaped onto an existing mound of toxic, never-to-be-repaid, debt.

Stocks often blast higher during bear markets. Bonds rise when central banks promise to buy bonds. But such rallies are not sustainable. Our economic and political responses to the virus damaged a weak economy.

Bonds and stocks carry counter-party risk. If Company A can’t pay Company B, then your trust in Company B might be rewarded with default and bankruptcy.

If an employee is laid off, he may not pay his bills. The second and third-order consequences are huge and long-lasting. Think bankruptcies, foreclosures, lost homes, closed businesses, massive unemployment, human misery, social unrest, anger at the elite, and rage against the machines of government and Wall Street.

Gold and silver coins and bars have no counter-party risk. They are universally valued and hold their purchasing power. The same is not true for dollars, stocks, sovereign bonds, commercial paper, mortgage paper, real estate investment trusts, student loans, and so many more.

Gold and silver coins and bars have been difficult to source in the past two weeks. There is no fever like gold fever. Fear and panic are huge motivators.

Many stocks will rise a little and fall a lot. Gold and silver will fall a little and rise huge. Take your choice.

In times of fear and panic, over three thousand years, people have found security in gold and silver bullion. This time is NOT different. Read: “There’s No Gold!”

Buy silver. Buy gold. The gold to silver ratio exceeded 125 in March, an all-time high. That ratio will fall to 50 or maybe 20 as silver rises to all-time highs in coming years. The Dow to gold ratio peaked over 44 in 1999 and peaked again in 2018 over 22. It is now 13.3. That ratio will fall below five and might reach two or one as gold rockets higher.

Miles Franklin can’t lower interest rates, supply toilet paper, manufacture vaccines, change Fed policies, send bailout checks to individuals or devalue the dollar. Other businesses, agencies, and central banks perform those functions. Government and The Fed will do their things, even if they kill the economy and the dollar’s purchasing power.

Miles Franklin sells gold and silver—the real stuff. You may experience delays receiving your product, but prices are confirmed. Call 1-800-822-8080.

Gary Christenson

The Deviant Investor

The Express Train to Insolvency

Miles Franklin sponsored this article by Gary Christenson. The opinions are his and are not investment advice.

Breaking News:

  • Gold reached $1,800, close to its all-time high of $1,923.
  • Silver reached $19, a long way from its high of $50.
  • The NASDAQ hit another new high.
  • Tesla closed on July 10 at $1,544, a new high. Tesla looked outrageously high at $1,200. Now the bubble has blown even larger.

Wolf Street divides the stock market into the “Giant 5” (Apple, Microsoft, Amazon, Alphabet, and Facebook – total market cap = $6.6 trillion) and the remaining Wilshire 3,410 stocks. The Dow hit a post-crash high on June 8, and is lower as of July 10. But the “Giant 5” have surged 14% since June 8. The Wilshire 5000 minus the “Giant 5” is down 10.9% since the February peak. Those five tech stocks caused the bubble and the new NASDAQ highs. Look out below when they crash. Examine Tesla. Does the stock price suggest a bubble?

We have begun a long and perilous journey toward currency failures, insolvency, higher consumer prices, stagflation, and eventual loss of dollar reserve currency status. Read: A Long and Perilous Journey.

A Brief Review:

  • Central banks created, via computer entries, well over $20 trillion in new currency units. This should encourage us to question the value of those newly created currency units. Call them fake money.
  • The U.S. government spends more than its revenues every year and borrows the shortfall. Official national debt on January 1, 2009 was $11.1 trillion. On January 1, 2017 it stood at $19.8 trillion. As of mid-July 2020, debt has “blown out” to $26.5 trillion, up $4.5 trillion in the last 12 months.
  • Interest rates have fallen to multi-decade lows because the Fed buys bonds and supports the bond markets. Without Fed support, interest rates would be higher, and the government would be less able to deficit spend in the $ trillions.
  • The Fed is monetizing U.S. government debt, a risky practice. The government deems it necessary to spend, given the COVID-19 shutdown, huge unemployment, many insolvent corporations, skyrocketing bankruptcies, election year politics, current recession/depression, and the need to buy votes.
  • Necessary or not, excessive spending has consequences. The U.S. has entered the era of MMT—Modern Monetary Theory or Magic Money Tree economics, in which debt hardly matters. Call it QE4ever or “Inflate or Die” currency creation. Call it insanity or nonsense.
  • The Fed has forced everyone to drink their Kool-Aid. This “QE4ever Kool-Aid” is poisonous to the lower 90% of Americans. The wealth of the top 1% has jumped because of the lockdown and QE4ever, but the financial security of the lower 90% is down hard.
  • The quantity and quality of coming fiscal and monetary nonsense should worry every thinking individual who wishes to protect his savings, purchasing power, and retirement funds. (Do you own enough gold?)

The Fed is monetizing government debt, a sign of trouble to come. What other programs could government and the Fed initiate that accelerate the journey to national insolvency?

a) MMT creation – $ trillions more debt each year.

b) Universal Basic Income—income for all, work not required.

c) Reparations to your favorite groups. Where will it end?

d) Stimulus programs, boondoggles, and payoffs.

e) Expanded Medicare, Medicaid, Student loan forgiveness.

f) Enlarged wars. A new war.

g) Pension plan bailouts for cities and states.

h) Bailouts for politically connected corporations, cities, and states.

i) When will it end?

Riding the Fantasy Express Train toward Insolvency and Dollar Collapse

Speculating on fiscal and monetary nonsense during the next two years…

a) The U.S. has 40+ million newly unemployed workers. They need currency units to pay for rent, mortgages, credit card bills, student loans, and… food. Assume they need $25,000 in government handouts during the next year. That is $1 trillion.

b) Student Loans: Assume $500 billion in defaults, less than one-third of outstanding loans. If former students aren’t working, they won’t be repaying loans. Add half a $ trillion.

c) Bailouts for city and state pension plans. New York, Chicago, New Jersey, Illinois, and California come to mind. Assume $3 trillion of fake money will be needed.

d) Bailout Wall Street. Estimate another $3 trillion to keep the upper 1% happy.

e) Bailout large corporations, even though they bought back over $4 trillion in stock in the past decade. Assume they need $3 trillion. The currency units are free, so add more as needed.

f) Well over 100,000 businesses have (or will be) closed forever. That means more unemployment, lost sales taxes, and other revenue shortfalls. Estimate another $ trillion or so to bailout politically connected businesses.

g) Free checks to citizens, illegal aliens, dead people, and others. Government has spent $2 or $3 trillion. Assume they will distribute another $3 trillion to individuals. It might discourage rioting.

h) Toss in another $2 trillion for miscellaneous. The Fed is “printing” so why not?

Total of the above is $16.5 trillion. It’s free, so round up to $17 trillion in excess spending and new debt during the next twenty-four months. The era of fiscal and monetary nonsense proceeds.

Total official national debt is $26.5 trillion. Add another $17 trillion of fantasy bailouts and the debt exceeds $43 trillion by the end of 2022. Assume $3 to $4 trillion in added debt for 2023—2024 and the official debt has jumped to $50 trillion in Fantasyland. Those new fake dollars will devalue existing dollars. Maybe it will take a few extra years to arrive at $50 trillion in national debt. With MMT it doesn’t matter… or does it?

Official U.S. government gold reserves (Remember –  Fantasyland) are 260 million ounces. If (supposed) U.S. gold bullion backed the national debt, the price of gold in Fantasyland in 2024 could be $200,000 per ounce.

Gold at $2,000 looks tiny compared to $200,000 per ounce, or $26.5 trillion in current debt, or $50 trillion in future debt.

Back to the world of The Fed, deficit spending, and politics:

Second Order Consequences:

  • Debt increases, currency in circulation rises, dollars devalue in purchasing power and assets rise in price. Example: the NASDAQ hit a new-all time high this week. The S&P 500 Index, Apple stock (market cap = $1.6 trillion), Tesla stock, gold, and silver will rise (erratically) as the era of fiscal and monetary nonsense unfolds.
  • Apple stock sold for $11 in 2009, and closed at $383 on July 10, up 34 times.
  • The S&P 500 Index was 667 in March 2009 and closed at 3,185 on July 10, up 4.8 times.
  • COMEX silver sold for $9 in October 2008, and for $19.08 on July 10, up 2.1 times. Apple stock, boosted by QE, was a better investment… so far.
  • COMEX gold sold for $700 in October 2008 and for $1,801 on July 10, up 2.6 times.
  • Those extra dollars created by the Fed and other central banks have boosted the price of tech stocks more than prices for gold and silver. Expect gold and silver to rally more than tech stocks during this era of fiscal and monetary nonsense.
  • Consider the ratio of ten times gold to the DOW Index. Gold is inexpensive compared to the inflated price for the DOW stocks.

From Doug Kass:

“Several key labor-intensive industries – education, lodging, entertainment (Broadway events, concerts, movie theaters, sporting events), restaurant, travel, retail, non-residential real estate, etc. – face an existential threat to their core. For these industries, they simply cannot survive the conditions they face. For these gutted industries, we face, at best, an 80% to 85% recovery in the years to come. It should be emphasized that Covid-19 just sped up what was already a secular decline.”

CONCLUSIONS:

  • Official national debt increased $4.5 trillion in the last 12 months. Spending is “out-of-control.” The economy has fallen into a recession or depression with a collapse in GDP, employment, tax revenue, and economic activity. Debt will grow.
  • Without Fed “printing” and QE4ever, interest rates would be higher, and stocks would be lower. Perhaps the Fed will lose control and the market will force interest rates higher.
  • Allowing interest rates to rise to historically normal levels would “blow-out” the budget. Take $30+ trillion in debt and assume 6 – 8% interest. That means $2 trillion in federal interest payments every year. Grim!
  • There is minimal desire to control spending in congress, the administration, or on Wall Street. More spending will come, and many economists will assure us that bailouts, QE4ever, stimulus programs, expanded social programs, and a new war are essential for the economy. Meanwhile the economy has entered a recession/depression and government tax revenues will decline.
  • The bankruptcy attorneys for businesses, corporations, and individuals will get more work. Debt will be liquidated or “written down” and the recession/depression will deepen.
  • The new debt will boost prices for gold and silver, and after a correction, for stocks as the mini dollar replaces our devalued dollar. The dollar has not yet collapsed, but it’s possible.

SOLUTIONS:

  • Question the statements of politicians, economists, and nationally known doctors in charge of COVID-19 policy and spending decisions. With them in charge, the wealthy will become wealthier.
  • Expect much larger debt, lower governmental revenues, an enormous increase in bankruptcies, continuing unemployment, and many failed businesses. Stagflation and higher prices could be the best we should expect. Much worse is possible.
  • Many debts will not be paid. Other debt will be written down to pennies on the dollar. Those unpaid debts are another’s asset. Counter-party risk will become important. Gold and silver have no counter-party risk… Repeat: In an era where counter-party risk destroys wealth, we are safer using gold as financial insurance.
  • The Fed will sacrifice the dollar as they support stocks and bonds.
  • Stocks will correct lower and then rally as the dollar is devalued.
  • Gold and silver will exceed all-time highs and then rise multiples higher, depending on the quantity and quality of fiscal and monetary nonsense demanded by our leaders, politicians, and economists.
  • Buy gold and silver, especially silver, and sleep well knowing that your savings and retirements are protected from growing counter-party risk as debt paper is destroyed.

Listen: JPM Has Amassed the Greatest Hoard of Silver in History for a Reason.

Miles Franklin sells silver and gold coins and bullion. Call 1-800-822-8080.

Gary Christenson

A Long and Perilous Journey

Miles Franklin sponsored this article by Gary Christenson. The opinions are his and are not investment advice.

Suppose you knew tragedy would occur at the end of a long journey. That knowledge would change your behavior, attitudes, and expectations. Global financial systems are near the end of a long journey.

What Long Journey?

Most unbacked fiat currencies issued by governments and central banks have failed and ended in tears, inflation, abuse, and corruption. Governments collapsed, devalued currencies to minimal or zero value, and people lost jobs, savings, retirements, and homes.

Dollars, euros, yen, and pounds have been over-printed and devalued but have not yet failed.

Knowing the many historical examples of failed currencies, and knowing that every major currency is backed by nothing in 2020, and knowing that central banks have created, from “thin air,” over $20 trillion in new currency units, the dollar’s perilous journey should concern us.

The world is traveling a long and perilous journey toward failed currencies. The implications are staggering. Unless the following are true, expect many fiat currencies to fail, probably this decade:

a) Central banks are wise managers of the currencies they create.

b) Governments manage spending, debt, and their economies responsibly.

c) Consumer price inflation and total debt stay low.

d) Spending by governments, corporations, and individuals is contained within existing revenues.

e) Fractional reserve banking and QE are not used.

f) Public and private pension plans are funded and solvent. Government bailouts will not be needed.

It is obvious that the above are false. Central banks manage economies to benefit their wealthy cronies. U.S. government spending is out-of-control and growing worse every year. Official consumer price inflation (CPI) is supposedly low, but everyone knows better. U.S government spending has exceeded revenues every year for decades. Official national debt has reached $26 trillion. Fractional reserve banking and QE4ever create trillions of currency units every year. Many state, city, and corporate pension plans are insolvent, limping along, and waiting for federal bailouts. Over 40 million newly unemployed workers have filed for benefits since March, stressing budgets and creating a wave of bankruptcies.

We are traveling a long and perilous journey toward currency failure and insolvency. Federal Reserve actions look like a runaway train barreling down the tracks toward a barrier at the end of the line.

Does anyone see any serious political effort to reverse our doomed trajectory? Will fiscal and monetary sanity return in an election year marred by an ugly recession, massive unemployment, and a coming wave of bankruptcies? Probably not. Expect more debt.

WHAT ARE THE CONSEQUENCES?

QE4ever, MMT (Magic Money Tree) economics, “Inflate or Die,” fiscal stimulus, helicopter money, and central bank purchases of stocks and bonds lead to market distortions, inappropriate risks, inflated stock and bond markets, crashes, recessions, and depressions. And yet we persist in disastrous actions…

Along this journey we know the dollar’s purchasing power will plummet, much higher prices are inevitable, hyperinflation is possible, and many asset prices will deflate before spiking higher during an inflationary disaster.

How much inflation, how deep a recession, and whether deflation comes before or after inflation will be determined by actions of The Fed and U.S. government.

BUY GOLD AND SILVER TO PROTECT YOUR ASSETS AND SAVINGS.

HISTORICAL PERSPECTIVE:

As the dollar is devalued (down 98% to 99% since 1913) prices rise. Cigarettes cost twenty-five cents in the 1960s. Now they are $5 to $10 per pack. Thousands of other examples exist at the grocery store, doctor’s office, hospital, and college tuition office.

As the dollar buys less, houses, the S&P 500 Index, gold, and hundreds of other necessities rise in nominal prices. Do you remember paying a dime for restaurant coffee?

Examine the graphs of M2 (a measure of money supply) and gold prices.

As too many dollars are created by the banking cartel, M2 rises more rapidly than the economy grows. Prices rise. We don’t need an academic discussion, complete with integrals and partial differential equations, to understand this concept.

Total credit market debt per the St. Louis Fed tells the same story. More debt forces gold prices higher.

The S&P and gold rise as dollars buy less.

National debt shows the same relationship. Government creates excessive debt, and higher gold prices and a weaker dollar follow. We know that national debt will increase by multiple trillions every year, regardless of which political party is mismanaging the economy, regardless of which Fed Chairman is facilitating the transfer of assets from the many to the few, regardless of which tech company is censoring news, and regardless of pandemics, infection rates, and distracting stories of impending doom.

Politicians will spend currency units they don’t have by borrowing, and borrowing, and borrowing…

M2, total debt, the stock market, national debt, and gold prices will rise as the “Powers-That-Be” devalue dollars and transfer wealth to the financial and political elite. This devaluation process has been ongoing since 1913, and more aggressive since 1971 when President Nixon “temporarily” abandoned gold backing for the dollar and allowed the quantity of debt and dollars to skyrocket.

Read: What Went Wrong in 1971.

This perilous journey began in 1913, accelerated after 1971, and will eventually create a crash or reset with dire consequences for everyone, except the political and financial elite. This year and 2021-2025 will be difficult.

WHAT IS EXPENSIVE in July 2020?

Tesla stock closed at $1,208 on July 2. Sounds expensive, considering it sold for less than $180 thirteen months ago. The NASDAQ closed at 10,207. Expensive! Silver (COMEX) closed at $18.32. Cheap!

Examine the ratio of the NASDAQ to Silver.

Silver is inexpensive compared to the NASDAQ! That will reverse.

WHAT SHOULD WE EXPECT?

  • Debt creation will accelerate for several more years regardless of which political party controls the Senate and Administration.
  • New programs will be implemented. They will be costly and “paid for” via borrowing and QE4ever. A few that could accelerate national insolvency are aggressive MMT dollar creation, Universal Basic Income, reparations to selected groups, “stimulus” programs, expanded Medicare, Medicaid, tuition cancellations, more wars, pension plan bailouts, and bailouts for states, cities, corporations, and banks.
  • A much higher DOW and S&P 500 will probably occur after a correction and the coming inflationary disaster.
  • Apple and Tesla stock might sell for even higher prices than in July 2020.
  • Gold and silver prices will sell at all-time highs and then multiples higher by 2026.
  • Gasoline at $_____ . Your turn to guess. Food prices?
  • Wealth will continue to be transferred from the many to the few.
  • Our perilous journey toward currency destruction will include disasters, setbacks, and tears.

Read: We are on borrowed time.

CONCLUSIONS:

  • The banking cartel creates dollars because they can, and to increase their wealth and power.
  • Those newly created trillions of dollars devalue existing dollars and increase prices of financial assets and consumer goods.
  • Dollars are debts issued by the Federal Reserve. They are currency units, not real money.
  • Since dollars are debts, total debt inevitably increases. Someday, perhaps soon, a reset will occur.
  • Stocks and most prices rise as dollars buy less.
  • Stocks are expensive in 2020.
  • The NASDAQ fell over 80% after the 2000 bubble. Gold fell 70% after the 1980 bubble. Silver fell over 70% following its 2011 high. Buy what is inexpensive and avoid the expensive sectors.
  • Gold and silver are inexpensive compared to stocks, dollars in circulation and total debt. They are “go to” assets for this decade.

Silver prices are almost as low, relative to debt and the stock market, as they were in 2001 when they bottomed at $4.01. Food for thought…

Miles Franklin sells gold and silver coins and bullion. Insurance may reduce your risk during a perilous journey. Gold and silver are insurance against government and central bank currency devaluations, corruption, and dangerous policies.

Call Miles Franklin at 1-800-822-8080.

Gary Christenson

Tech Bubbles – Then and Now

Miles Franklin sponsored this article by Gary Christenson. The opinions are his and are not investment advice.

Breaking News: The NASDAQ 100 Index closed at 10,094 on June 10, 2020, an all-time high, and the Fed recently printed $3 trillion of fiat dollars. Fed “printing” levitated stock prices and increased the wealth of the financial and political elite. However, “currency printing” and QE4ever do not create prosperity, wealth, social contentment, jobs, gold, silver, sanity, or health.

The COVID-19 virus and the ongoing economic shutdown have increased suicides, unemployment (over 44 million have filed), drug abuse, alcoholism, child abuse, anger, riots, and bankruptcies. But the Fed is doing what it does best: creating dollars; transferring wealth from the many to the few; increasing consumer price inflation; and lying about their actions.

Our doctors and politicians demanded we drink the “mask and lockdown Kool-Aid”… Maybe they saved many lives… Above my paygrade…

Did the lives “saved” from COVID-19 infections justify other lives lost, bankruptcies, economic collapse, unemployment and so much more? That question is above my paygrade… and too late. The “shutdown train” ran down the tracks and created an economic reset.

The first and second-order consequences of the shutdown include:

a) A “tech bubble.” What and how and why? See below.

b) Massive deficits, more unpayable debt, and escalating fiscal and monetary insanity. What financial and political nonsense did the economic shutdown conceal? Also, above my paygrade…

c) Millions of unemployed workers, missed mortgage payments, overdue rents, late credit card payments, bankruptcies, and the list continues.

d) Combine with Fed “printing,” QE4ever, various lies and coverups, a hefty dose of media nonsense, and there you have it… a Tech Bubble.

WHAT TECH BUBBLE?

Tesla stock: $15 in July 2010, and $1,001 on June 19.

Apple stock: $8 in August 2006, and $349 on June 19.

Amazon stock: $26 in July 2006, and $2,675 on June 19.

The Fed inflated another Tech Bubble in 2019-2020, like in 1999–2000. Note: the stock market top in 2007 was a real estate bubble, not a tech bubble.

Reminder: After the 2000 tech bubble, many companies failed, and the NASDAQ 100 dropped over 80%.

Could a crash happen again? Yes, but perhaps not if the Fed is all-powerful and blows more “fiat air” into the tech bubble. At my paygrade, an all-powerful Fed and a continuously inflating bubble look unlikely.

The Fed can create currency units, but not prosperity, jobs, or wealth.

Place your bets: (Drink the Kool-Aid if necessary.)

a) The Fed will boost the NASDAQ until election day and new highs are coming. Many people believe this scenario.

b) Much of the U.S. economy is crashing and, regardless of QE4ever, the markets will acknowledge that reality. Did you buy enough gold this month?

BUT IS THE NASDAQ 100 IN A TECH BUBBLE?

Consider the NASDAQ 100 to Russell 2000 ratio. Yes, the NASDAQ is in a bubble.

Examine the NASDAQ 100 to S&P 500 Index ratio. Yes, the NASDAQ 100 is in a bubble.

QUESTION: WHAT HAPPENS TO ALL BUBBLES?

ANSWER: THEY IMPLODE!

The NASDAQ 100 is a bubble. Stock prices for Tesla, Apple, and Amazon agree. Tech stocks are priced too high, especially the big tech stocks favored by the political and financial elite and the Swiss Central Bank.

Yes, the Swiss Central Bank creates currency from nothing, buys dollars, and invests in tech stocks, which supports the tech stock mania. Add TINA, “There Is No Alternative,” and tech stocks rise higher. Force interest rates lower and stocks look attractive. Ordinary greed, momentum followers, Robinhood day traders, optimists who expect the NASDAQ to rise to 20,000, and media hype push the index ever higher.

But bubbles always implode! Take care! Maybe the NASDAQ can rise further, supported by Fed “printing.” Maybe not.

IS THERE AN ALTERNATIVE TO THE TECH STOCK BUBBLE?

Of course, there are choices. TINA is mostly nonsense. Consider:

After the tech stock crash in 2000—2002, silver rose from $4 to over $48, even though the Powers-That-Be (PTB) weren’t happy about the rally.

After the DOW all-time high in 1968 and another nominal high in 1973, gold rose from $40 to over $800 while the nation floundered in “stagflation”—a stagnant economy combined with inflation in consumer prices.

Sound familiar? Yes, but 2020–2025 will be worse and include:

a) Crashing economy, caused by crushing debt, pervasive financialization, and the COVID shutdowns.

b) Huge inflation in commodity prices, created by QE4ever, Fed printing, and low or zero interest rates.

c) Social unrest, income inequality, racial tensions, wealth inequity, unemployment, a long hot election year summer, New World Order agenda, riots, planned violence and more.

OUR NEWER NORMAL WILL BE SUPER STAGFLATION.

But silver and gold prices are several times higher than in 2001. Are they in a bubble, like tech stocks?

Since 2010, Tesla stock is up a factor of 66. Really?

Since 2006, Apple stock is up a factor of 44.

Since 2006, Amazon stock is up a factor of 103.

Since 2001, silver is up a factor of 4.5. (Devaluing the dollar.)

Since 2001, gold is up a factor of 6.8.

THE NASDAQ is the BUBBLE, NOT SILVER OR GOLD.

Look at the NASDAQ 100 to silver ratio. Yes, the NASDAQ 100 is in a bubble when measured in ounces of silver. Expect a correction lower in the NASDAQ and higher silver prices in coming years.

WHAT ABOUT THE GOLD TO SILVER RATIO?

The gold to silver ratio, or its inverse, the silver to gold ratio, are important.

When the gold to silver ratio is high, it indicates a bottom in prices for both. When the ratio declines, silver prices advance faster than gold prices.

When the (100 times) silver to gold ratio is low, that suggests a buy zone for silver, such as 2003, 2008, 2016, and 2020.  Prices (weekly data) when the ratio hit bottoms were:

Date             Ratio      Silver Price     Lowest Nearby Silver Price

May 2003       1.24           $4.53              $4.34

Oct. 2008       1.19           $9.33              $8.53

Feb. 2016       1.20           $14.69         $13.61

March 2020    0.83           $12.39         $11.77

WE HOPE THEY ARE WRONG DEPARTMENT:

Sven Henrich:

“There’ve only been two periods in history where the markets have disconnected so far from the economy that it’s reached levels of 150% or higher. One of those eras was the Nasdaq bubble in 2000 and the other one, ironically, was the February 2020 top.”

Alasdair Macleod:

“But an imminent banking crisis is now a near certainty, with most global systemically important banks in a weaker position than at the time of the Lehman crisis.”

“It will then become obvious to everyone that the Fed is sacrificing the dollar in order to fund the government, keep the banking system going and to support the economy by attempting to provide the liquidity to defray supply chain failures.”

“The escalation of bankruptcies and of nonperforming loans worldwide will almost certainly take the banking system down.”

Brandon Smith:

“The truth is, the Fed is not a bumbling maintenance man. The Fed is a saboteur, a suicide bomber that is willing to destroy even itself as an institution in order to explode the US economy and clear the path for a new globally centralized one world system.”

CONCLUSIONS:

  • Central bank “printing” and QE4ever boosted the NASDAQ for years. As the advance proceeded, fewer stocks participated in the mania. The recent tech bubble favored the FAANG stocks plus Tesla and a few others.
  • Based on ratios to the Russell 2000, silver, the S&P 500 Index and others, the NASDAQ 100 is in a bubble.
  • The tech stocks are in a bubble. Bubbles ALWAYS implode. Perhaps soon, and maybe not until after November 2020, but bubbles always implode. Watch out below!
  • The silver to NASDAQ ratio shows that silver prices can rally by a large factor in the next five years. NASDAQ prices can fall a long way.
  • The silver to gold ratio hit a new low and probably has bottomed. Higher silver and gold prices lie ahead.
  • Charles Nenner says that gold will be in a bull market until 2026. Silver prices should lead gold prices.
  • Is it reasonable to expect that 44,000,000 unemployed Americans, crashing GDP, riots, depression era number of bankruptcies, and crushing debt will be neutralized by QE4ever?
  • Is it reasonable to expect that QE4ever will levitate the NASDAQ for another five years without a major correction/crash?
  • A risk/reward analysis favors silver and gold over high-flying bubblicious NASDAQ stocks.

You can trust the multi-thousand-year history of silver and gold as real money, or the truth-challenged statements from the Fed and our politicians. At my paygrade, silver looks safe, sane, and real. The NASDAQ looks over-valued and vulnerable to a large decline. Look out below!

Miles Franklin will recycle dollars from high-flying tech stocks into real money—silver and gold. Call 1-800-822-8080.

Gary Christenson

A Turbulent Year

A Turbulent Year

Miles Franklin sponsored this article by Gary Christenson. The opinions are his and are not investment advice.

The DOW hit an all-time high on December 3, 1968 at 985.

WHAT WAS DIFFERENT IN 1968?

In 1968 gold sold for $41, silver averaged $1.96, gasoline cost $0.30, an average house was $14,950, cigarettes sold for $0.30 and a new truck cost $2,500 – $3,000.

The Vietnam War raged even though the war and military draft were violently unpopular. President Johnson declined to run again in 1968. Martin Luther King was suspiciously assassinated. Robert F. Kennedy was assassinated under equally suspicious circumstances in 1968.

Protestors violently disrupted the 1968 Chicago Democratic Convention. North Korea captured an American ship, the USS Pueblo. Feminists marched, burned their bras, and complained about gender bias and unequal opportunities. Racism and abortion were “hot-button” issues. Cities burned, while people hated the police more than usual.

The national debt was $350 billion.

The DOW high of 985 lasted for over four years in nominal dollars and much longer when measured in inflation-adjusted dollars.

The DOW to gold ratio was 24. That ratio declined to one as gold surged over $800 in 1980 while the stock market languished during the 1970s stagflation.

***

TODAY – JUNE 2020:

In early June 2020 gold sold for $1,737, silver stood at $17.48, gasoline cost $1.75 – $2.50, a new house was $250,000 – $400,000, cigarettes cost $5.00 – $12.00, and a new truck was priced at $50,000 to $80,000.

The Afghan War raged even though the U.S. military admitted it could not win, presidential candidates made huge promises, no major politicians have been assassinated, and rioters burned businesses in hundreds of cities.

The Democratic and Republican conventions are coming and could be violent. North Korea remains a political and nuclear problem, women are not burning their bras, but many people are complaining about inequality in wealth, income, privileges, race, and gender. Racism and abortion remain “hot-button” issues.

Rioters burned buildings, tore down statutes, and demanded cities “defund the police.”

The national debt exceeded $26,000 billion, after rising $2.8 trillion since January 1, 2020.

Some people remain scared about the COVID-19 pandemic. Most people worry about being unemployed, unable to make mortgage payments, can’t pay rent, overdue credit card bills, food prices, and wealth inequality.

The DOW hit its all-time high of 29,551 on February 12, 2020. The NASDAQ surpassed 10,000 on June 10. Those highs might last days or a decade. Fed “printing” and market levitation are not all-powerful, but they can’t be ignored.

The DOW to gold ratio reached 22 in 2018 and has fallen to under 15 in early June 2020. The ratio will fall further.

***

Was 1968 materially different from 2020?

People are angry and rioting. The Powers-That-Be (PTB) are fomenting wars, encouraging spending, and creating massive debt. The media is compromised, social unrest is rampant, and the populace is polarized by political party, race, gender, wealth, religion, hatred, racism, and abortion.

The above describes both 1968 and 2020. They are similar.

***

The decade following 1968 saw violence, protests, riots, consumer price inflation, flawed policies, anger, and stagflation—economic stagnation combined with consumer price inflation—caused by excessive spending, and too much debt.

In 2020 we have experienced massive violence, protests, riots, higher prices, anger at government and the Fed, all-time high unemployment, and economic stagflation. Debts are skyrocketing higher, while politicians want to spend more, not manage better.

These trends will not last forever, but for several years we should expect:

a) Deficit spending, more debt, and Fed intervention in markets.

b) Asset deflation and commodity price inflation.

c) A weaker dollar with volatile stock and bond prices.

d) Increasing wealth inequality along with larger protests.

e) A bloody presidential campaign.

f) Stagflation, regardless of Fed interventions.

g) Weakening confidence in the dollar and U.S. government policies.

h) Welfare, warfare, and bailouts.

i) Anger at the Fed and banking cartel.

j) Economic and political stupidity.

k) Protection for the political and financial elite.

l) Higher gold prices as investors seek to preserve their capital.

m) Higher silver prices based on reduced supply and larger demand.

WHAT DO THE GRAPHS SHOW?

The DOW to gold ratio trends for years and then reverses. The ratio peaked in 2018 and will probably fall for much of this decade as gold prices rise, and the DOW languishes or collapses.

The (log scale) gold and M2 graph shows that as M2 increases, so do gold prices.

Stated differently, as the Fed and the banking cartel devalue the dollar, gold and most other prices rise. Look at the cost of cigarettes, trucks, and houses in 1968 versus today. Prices could have remained stable, but the PTB want more debt, inflation, larger M2, and higher prices.

The result has been a gradual transfer of wealth from the poor and middle classes to the wealthy. However, income and wealth inequality create social unrest.

From Bill Holter:

“In the past, the safe haven has been the dollar and Treasuries, but if the problem is the dollar and the credit worthiness of Treasuries, what’s the next step of protection? All capital roads lead to gold.”

From Charles Nenner: Gold will be in a bull market until 2026.

Read: Charles Hugh Smith: “Unstoppable: The Greater Depression.”

THOUGHT EXPERIMENT #1:

The Fed wants to control the value of the dollar, stock market, and bond market. The Fed can’t control all three.

The Fed is owned by huge money interests (top 1%) who also own most stocks and bonds.

If the stock market collapses, it will hurt the political and financial elite.

If the bond market falls hard (interest rates rise), it will severely damage the political and financial elite.

The bottom 85% own few or no stocks and bonds. A market collapse might hurt them, but not directly.

What would you expect the Fed to do?

a) Let the market correct lower from current “nose-bleed” conditions.

or

b) Print dollars, buy bonds, MBS, ETFs, and stocks to levitate the stock and bond markets to protect the wealthy?

THOUGHT EXPERIMENT # 2:

 A collapsing stock and/or bond market will hurt the wealthy (top 1%).

A dollar crash affects everyone, and all prices skyrocket. However, it is less destructive to the wealthy while rising prices damage the poor and middle class more. Necessities are a major portion of expenses for the poor and struggling middle class.

Given the expected consequences of a stock, bond, or dollar crash, which would you expect the Fed to encourage?

a) Stock and bond crash that hurts wealthy cronies.

b Dollar collapse that hurts everyone, but primarily the lower 90%.

THOUGHT EXPERIMENT # 3:

It seems likely that Fed will allow the dollar to crash rather than stocks or bonds.

a) Will that boost the prices for gold and silver? Yes or yes?

CONCLUSIONS:

  • Since 1968 prices and debts are much higher, televisions are larger, social issues are similar, and in many ways, not much has changed.
  • A decade of stagflation followed the 1968 DOW high. A decade of stagflation could follow the June 2020 NASDAQ high.
  • The Fed and the wealthy prefer strong stock and bond markets. They will allow the dollar to crash to support stocks and bonds.
  • The Fed is not all-powerful. They can’t print gold, silver, confidence, social contentment, employment, prosperity, or health. The Fed can and will print trillions of dollars in their attempts to bail out state governments, pension funds, Wall Street, ETFs, and levitate the stock market.
  • But poorly run states, cities, and sovereign governments will implode with or without Fed assistance. Wealth and income inequality destroy public confidence in politicians and institutions.
  • A weakening dollar will inspire people to spend now to avoid higher prices later—the inflationary mindset. A weaker dollar and higher exchange velocity are a recipe for hyperinflation.
  • Hyperinflation, or even moderate inflation, plus declining confidence in the dollar, the Fed, and government are the ingredients for a huge runup in prices for commodities and precious metals. Expect higher prices for food, metals, and necessities.

Protect your assets from the predations of central banks, the developing stagflation, devaluing dollars, and increasing fiscal and monetary insanity.

Buy gold and silver, especially silver, from Miles Franklin. 1-800-822-8080.

Gary Christenson

Three Strikes and We Are Out

Miles Franklin sponsored this article by Gary Christenson. The opinions are his and are not investment advice.

STRIKE ONE: The Lockdown.

The closer came off the bench and threw “high heat” at the economy. Regardless of who created the COVID-19 virus, infection rates, actual virus-related deaths, our bungled management, and the ulterior motives that affected the pandemic and response, individuals and the U.S. economy must live with the consequences.

Strike one delivered:

a) 40+ million newly unemployed American workers in three months. A disaster!

b) Thousands or millions of devasted businesses. Another disaster.

c) Bankruptcies for small and large businesses and individuals.

d) Late (or no) payments for rent, auto loans, mortgages, and credit cards. Foreclosures are coming.

e) Commercial real estate crash. Shopping malls, office buildings and more.

f) Lost revenue, crashing GDP, massive new debt.

g) Crushed state and local budgets. Lower tax revenues.

h) Pension plans falling into insolvency.

But the NASDAQ 100 hit an all-time high on Friday, June 5. Profits are great for the political and financial elite who own 90+% of stocks and bonds that have been levitated by the Fed printing $3 trillion in a few months.

Those new highs were not confirmed by the DOW, S&P, Transports, or other indices. But never count Fed levitation out for short-term market manipulation.

The Fed can’t print wealth, prosperity, gold, silver, or happiness, but they will print digital currency units. The political and financial elite have Fed support backing them. However, the lower 90% get unemployment, bankruptcy, overdue credit cards, unpaid car loans, late mortgage payments, and a belief that “something is wrong.”

STRIKE TWO: The riots.

The closing pitcher threw strike two, a vicious curve ball that looked like an inside fast ball but curved over the plate and dropped to cross the outside corner at the batter’s knees. Strike two caught most of the U.S. by surprise. The forces of chaos waited for an opportunity and then struck. Riots were organized, police reacted, protestors were violent and peaceful, and moral outrage overwhelmed the media. People marched in the streets, ignored social distancing, and created chaos in hundreds of cities.

Businesses that survived the COVID lockdown, social distancing, and phased re-openings were destroyed in the riots. Vandalism and arson ruined pawn shops, offices, retail stores, and Wal-Marts. Bricks were suspiciously planted in convenient locations for use by violent rioters. Some riots were planned and professionally organized.

Strike two was deadly for businesses and people. The ugly consequences will extend far into the future.

STRIKE THREE:

The closer is preparing to throw his third strike and make the final out. Will it be another fast ball, a nasty slider, or an unexpected curve ball that fools the populace?

We can almost guarantee the following:

a) The Fed will create trillions of digital dollars, buy Treasuries, buy bonds and ETFs, and bail out banks, hedge funds and the financial elite. [Already happening.]

b) Politicians will promise giveaways, and assure people their vote will improve employment, social services, infrastructure spending, racism, the economy, unwinnable wars, and so much more. [Always happens.]

c) Politicians will accept “donations” from the political and financial elite. The elite receive helpful legislation in return. Money buys political protection and “favors.”

d) Politicians will spend, approve bailouts, and promise goodies for the people. What has worked for 2,000 years will be successful in 2020.

e) Debt, debt, and more debt

Creating currency units is so easy, people might ask:

a) If the Fed can create dollars to bail out big banks, why can’t they create more dollars, so individuals don’t pay income taxes to the IRS?

b) The Fed “prints” trillions of dollars. What is the purchasing power of those dollars in 2020 and how much less will they be worth in 2024, after massive devaluations?

c) Do I trust the Fed? Do I trust politicians? Has the economic system that benefits the elite failed most people? Protect your savings with silver and gold.

From Robert Heinlein (author)

“A managed democracy is a wonderful thing… for the managers… and its greatest strength is a ‘free press’ when ‘free’ is defined as ‘responsible’ and the managers define what is ‘irresponsible’.”

Read: The World Has Changed

Read: Who’ll Stop the Rain?

THIRD STRIKE POSSIBILITIES:

What about a third strike that blindsides the economy and American public?  Possibilities include:

  • Stagflation – 1970s style, when prices rose rapidly, wages lagged, and investments fell. Where is Paul Volker when we need him?
  • Deflation like in the 1930s, when most assets crashed. The dollar was tied to gold in the 1930s so the Fed could not create $3 trillion in a few months. The 2020 Fed wants to avoid deflation, so they print, print and print.
  • Inflation, where prices rise rapidly as the newly created dollars circulate through the economy.
  • Hyperinflation, where the Powers-That-Be choose to hyperinflate the currency. People lose faith in the currency, the Fed, and the government. “Spend it before it becomes more worthless.” It has happened before and could again.
  • Hyperstagflation: The worst of hyperinflation and stagflation.
  • A wave of corporate bankruptcies and huge write-offs. Coming!
  • More nasty virus scares in the fall. Who will benefit?
  • A derivatives disaster. Bailouts for big banks.
  • War, a “false flag” attack, a real attack, another “perfect storm,” dollar collapse, a gold backed foreign currency, the truth about Fort Knox gold holdings, political chaos, an “October surprise,” or another “black swan.”

Thoughts, courtesy of Robert Carrillo:

a) Scare people with a virus. Place them in quarantine. Count the number of dead every second of every day in every news headline. Close all businesses. 40,000,000 out of jobs. Peak unemployment. [Create fear.]

b) Remove entertainment: Parks, gyms, bars, restaurants, sports. No dating. No touching. Mask people. Dehumanize then.

c) Close temples and churches. Create a vacuum. Let depression, anxiety, boredom, and desperation set in. [Add drug abuse, child abuse, suicides, addictions, domestic violence, and cabin fever.]

d) Then…ignite hatred and civil war. Civil unrest.

e) Undermine the law. Loot. Attack law enforcement. Tell government to order them [police] to stand-down.

f) [The saga continues. Who benefits in an election year and who pays the protesters?]

From Alasdair Macleod: “Orphaned silver is finding its parent.”

The global economic and monetary situation is dire, due to both the coronavirus and because the credit cycle was already turning down in late-2019. The amount of monetary debasement deployed by central banks in an attempt to save their economies promises to be unprecedented to the point where total monetary destruction will be an increasingly likely outcome.”

CONCLUSIONS:

  • The damage has been done. It will take years to recover.
  • A rising stock market does not mean “all is well.”
  • Bailouts will be ongoing and occur often. The dollar will fall in purchasing power.
  • Dollars will be created by the trillions. Prices for consumer goods will rise, perhaps hyperinflate. More bailouts and larger federal and state debts are inevitable.
  • Confidence in the Fed and government will decline, as it should.
  • The rich will get richer and the lower 90% will clamor for crumbs, a UBI, and bailouts.
  • The problems created by 40+ million unemployed workers will not disappear soon.
  • As the Fed devalues the dollar, prices for gold and silver will rise, or possibly explode, higher.
  • How far gold and silver rise depends on the quantity of dollars printed, the loss on confidence in the dollar, and the virulence of economic stupidity that invades government and the economy.
  • THREE STRIKES AND WE ARE OUT! A nasty curve ball is streaking towards us.

Miles Franklin sells gold and silver bars and coins—real money. Both metals fell hard this past week. However, they will cost far more in devalued dollars by election day. Call 1-800-822-8080.

Gary Christenson

The World Has Changed

Miles Franklin sponsored this article by Gary Christenson. The opinions are his and are not investment advice.

BREAKING NEWS:

Silver (COMEX) rose $3.60 during May 2020.

Gold (COMEX) rose $42.70 during May.

The DOW was up 1,037 for the month.

THE BIG PICTURE:

Debt: US official national debt climbed to $25.7 trillion, up from $20 trillion in September 2017. 2020Q1 marked the beginning of huge deficits. Phrases that come to mind: out-of-control, outrageous, never-ending, unsustainable, unpayable, inevitable default, and corruption.

Central Banks: The Fed’s balance sheet (dollars created from nothing) rose to $7.1 trillion, up $3 trillion in a few months. We’ll see $10 trillion soon. Phrases that come to mind: corrupt, unsustainable, and Inflate or Die!

Interest rates have been artificially reduced to near zero. They levitate the stock market, reduce government and corporate interest expenditures, promote stock buybacks, encourage deficit spending, and boost Wall Street bonuses.

Stocks: The DOW peaked in February, crashed in March, and has rebounded since the bottom on March 23 (2020Q1). Liquidity from central banks levitates stocks. Sustainable: No!

Precious Metals: Both are rising, partially due to the devaluation caused by the dollars-from-thin-air creation at The Fed. Silver bottomed at $11.77 on March 18, 2020Q1

THE WORLD HAS CHANGED SINCE QUARTER ONE OF 2020:

We know the world will recover slowly from the shutdown (2020Q1) and will not return to the “normal” of 2019.

RATIOS SHOW WHAT?

The DOW to gold ratio for 35 years shows this ratio trends for years. It is trending down in 2020. Gold will outperform the DOW for several—probably many—years. Note the broken trend line.

The gold to silver ratio shows the preference for gold versus silver. For decades, this ratio has shown:

a) A high ratio (rolling over) indicates long term bottoms in both metals.

b) A high ratio indicates that silver will outperform gold when the ratio turns lower.

c) The ratio peaked in March (2020Q1) at 125 (highest in history) and has since dropped below 100. Expect silver to rise faster than gold for several years.

d) Expect both gold and silver to rally in this decade, as central bank “printing” and government deficit spending will devalue fiat currencies.

These are difficult to quantify, but rising gold prices suggest a lack of confidence in central bank policies, excessive printing of currency units, fear for the future, uncertainty, and declining faith in the central planners who occupy the Eccles Building in D.C. Much changed in 2020Q1.

WHAT ABOUT STOCKS?

Option A: Central bank liquidity injections will push stocks higher for many years. It worked since 2009, but 2020Q1 looks like a turning point. Dangerous!

Option B: Debt and stocks can’t rise forever. The S&P 500 Index may need several years to correct and consolidate when measured in nominal dollars. Based on the inevitable dollar devaluations, the S&P may take many years to return to purchasing power parity.

Option C: Don’t ask. Don’t tell. Buy silver instead.

The above graph shows that silver is inexpensive compared to the S&P. That ratio suggests that silver, even at $17+, is as inexpensive as it was in 2001 when it sold for $4 and change. The ratio could rise by a factor of ten. Silver could sell for over $100 in a few years without hyperinflation.

The NASDAQ 100 Index has been strong for decades. It rises high and then falls hard. After the 2000 crash it fell more than 80%. A repeat of the 2000 collapse, even with Fed liquidity support, is possible. Measured in purchasing power, the collapse could be larger.  The Powers-That-Be want a correction followed by another multi-year rise.

Don’t ask. Don’t tell. Buy silver instead.

Examine the ratio of the (narrow) NASDAQ 100 to the (broad) Russell 2000. This graph shows a blow-off top where the “Everything Bubble” imploded.

Note that the Russell 2000 has a “high” P/E ratio. This is NOT sustainable.

WHAT ABOUT NATIONAL DEBT?

Consider the log-scale graph. Do you see any reason to expect that massive debt will level off or decline? Nope! Business as usual means debt increases forever. In the “Newer Normal” debt explodes until the economic system “breaks” and a reset occurs.

THE RESET:

When the reset occurs, assuming you do NOT have senators on speed-dial, where would you prefer investments for your savings and retirement?

a) Dollars that the Fed and US government are devaluing.

b) Cash under your mattress.

c) Bonds that will eventually default.

d) Commercial real estate that looks shaky.

e) Retail businesses in the Age of Amazon.

f) The NASDAQ 100 Index after a ten-year runup.

g) Russell 2000 stocks with a P/E near 70.

h) Gold with a 3,000-year record for preservation of wealth.

i) Silver, selling near lows against the ultimate currency – gold.

CONCLUSIONS:

  • The world changed in 2020Q1. Few would suggest it improved. For a hint at the economic future, look at Argentina.
  • COVID-19 shutdown was the “pin” that deflated the “Everything Bubble.” If it had not been the COVID shutdown, something else would have popped the bubble.
  • The DOW to gold ratio shows that gold should rally for years.
  • Fed “printing” and government deficit spending will create a “tailwind” that supports gold and silver prices for three – ten years.
  • The gold to silver ratio hit an all-time high. History suggests higher silver prices for three – ten years.
  • The silver to S&P 500 ratio is near 2001 lows. It shows silver prices could rise much higher, even if the S&P collapses.
  • The NASDAQ 100 to Russell 2000 ratio shows a “blow-off high” occurred in early 2020. The advance was narrow. Expect both indexes to decline further.
  • National debt—you know the drill. Inflate or die! Manage the narrative. Control the media. Feed the huge corporations and large banks. Bailout everyone, including state governments, state and local pension plans, student loans, unemployment funds, Wall Street banks, and more. Every bailout adds to debt, dollar devaluation, and systemic fragility.

Attributed to Adolf Hitler:

“Make the lie big, make it simple, keep saying it, and eventually they will believe it.”  What comes to mind are: fake money, fiat currencies, central banking, fractional reserve banking, The Fed has your back, invest in stocks for the long term, gold is useless, silver will never again reach $50, digital dollars are necessary, there isn’t enough gold to back the currency, Fort Knox, etc.

Miles Franklin will convert digital and paper dollars into honest money—gold and silver. Call them at 1-800-822-8080. You are insuring your savings and retirement funds from the predations of central banks, devaluations, and government nonsense.

Gary Christenson

Who’ll Stop the Rain?

Miles Franklin sponsored this article by Gary Christenson. The opinions are his and are not investment advice.

From John Fogerty:

“Long as I remember,

The rain been comin’ down,

Clouds of mystery pourin’

Confusion on the ground.

Good men through the ages

Tryin’ to find the sun.

And I wonder,

Still I wonder

Who’ll stop the rain.”

The Rain that’s coming down… not gonna stop…

We’re not talking about liquid water that condenses from clouds and nourishes plants.

Instead, it’s a deluge of:

  • Central bank digital printing of currency units.
  • Growth in national debt.
  • Newly unemployed workers.
  • Crushing corporate, governmental, and individual debts.
  • Bankruptcies.
  • Lost revenues and closed businesses.
  • Wall Street and Hedge Fund bailouts.
  • Helicopter “money.”
  • Repo Madness.
  • Political nonsense in an election year.

Yup, the falling rain of fiscal, monetary, and political nonsense has turned into a deluge. It will get better and then worse. Coming are a second wave, a respite, and then a third wave.

What else should we expect in an election year with a deeply polarized electorate? Add the power struggle between the “Deep State” and those who seek change. Stir in resentment against the political and financial elite. Mix with a devastating COVID-19 shutdown. Agitate the combination.

Address with the same failed remedies:

  • Lower interest rates.
  • Create $ trillions to bail out Wall Street.
  • Monetize Treasuries for government spending.
  • Send checks to individuals. Helicopter money.
  • Close businesses, travel, much of the economy, personal services, retail, medical services, and eliminate millions of jobs.
  • Hope for a vaccine even though virus vaccines have a spotty record. However, they are profitable for Big Pharma.

Rain is pouring down. Expect:

  • Massive debt will be used to “fix” an unpayable debt problem. Oops!
  • Low interest rates conceal risk and hide the true cost of borrowing.
  • Bailouts for Wall Street and individuals.
  • Bankruptcies, skyrocketing unemployment, late payments, defaulted loans. Recession/depression.
  • Many businesses and jobs gone forever. Oops!
  • A “Newer Normal” that will be painful for years.
  • Blame the virus.

SPECIFICALLY:

Central Bank Printing: The Fed added over $3 trillion to its balance sheet in a few months. They bailed out Wall Street and the US government.

For perspective, that newly printed $3 trillion is twelve times the value of the gold supposedly vaulted in Fort Knox. The Fed can create digital dollars, but not gold. The future actions of the Fed are obvious—they will create boatloads of digital dollars. Chairman Powell confirmed that the Fed will do whatever is necessary.

National Debt:

September 30, 2000    $5.67 trillion

September 30, 2010    $13.56 trillion

January 1, 2020           $23.17 trillion

May 22, 2020               $25.47 trillion

National debt increase in less than five months: $2.3 trillion. The House passed another bailout bill for $3 trillion. It is an election year. Name three senators who are worried about the national debt. Right! A version of that bill is likely to pass. More bailout dollars and expanded debt are inevitable.

UNEMPLOYED WORKERS: Over 38 million Americans have filed for unemployment in the last two months. The real number of unemployed is higher. Expect bailouts and more “Helicopter Money.”

CRUSHING DEBTS: Many Americans did not pay rent in April or May. The same is true for mortgage payments, credit cards and auto loans. Expect bailouts to funnel dollars to individuals so they can feed the Debt Monster.

BANKRUPTCIES, LOST REVENUES AND CLOSED BUSINESSES: Several retail giants have declared bankruptcies. Many small businesses have closed forever. Some will survive, others will fail in the “second wave” regardless of how many digital dollars the Fed prints. The Fed can’t print prosperity.

WALL STREET BAILOUTS AND REPO MADNESS: Wall Street on Parade said, “By March 14, the Fed had pumped out more than $9 trillion in revolving repo loans to the trading houses on Wall Street…” The Fed worries about big banks and hedge funds. Small businesses and individuals cause minimal concerns in the Eccles Building.

HELICOPTER MONEY: The CARES act authorized $300 billion for individuals. A possible next step is a UBI—Universal Basic Income for most adult Americans. A UBI will aid the lower 90% so they can feed the Debt Monster.

POLITICAL NONSENSE: If we can make the other candidate look bad, it helps our candidate. Truth, honesty, and integrity play minimal roles in Presidential elections.

THINGS TO CONSIDER:

Martin Armstrong: “Coronavirus Bankruptcy Pandemic Continues”

“There is NO POSSIBLE way to restore the economy. We are NOT putting Humpty Dumpty back together again.”

There is NO AMOUNT of stimulus that will prevent an economic contraction into 2022.”

Michael Snyder: “Worst Unemployment Spike in History”

“The U.S. economy is now in a death spiral.”

“More than one-fifth of Americans said they had little or no confidence in their ability to pay the next month’s rent or mortgage on time.”

Alasdair Macleod: “The Path to Monetary Collapse”

“The next problem is a crisis in the banks, wholly unexpected by investors and depositors. At a time when lending risk is soaring off the charts, their financial condition is more fragile than before the Lehman crisis.”

“… central bankers … will be encouraged to double down on monetary inflation, principally to support financial markets.”

David Schectman: “DOW 40,000 Would Solve All Our Problems”

“Based on the total collapse of the economy (that is not subjective) and the Federal Reserve’s response, to create trillions of dollars (that is not subjective) that has taken place in the last three months, the odds of the trends [gold and silver moving up] continuing are very strong.”

“You cannot grow an economy by printing money… I honestly don’t know if there is a solution. I’ll be optimistic and hope so.”

Egon von Greyerz: “The Global Forest Fire Is Here”

“What few realize is that the Deep State or Powers That Be are going to lose control totally. They are totally dependent on the world in which they can control everything through debt and the fake monetary system they have created. But let me make it clear that this fake system is about to implode.”

“… the world is starting to discover that paper money cannot survive when central banks are printing it to death.”

News: “Central Banks are Buying $2.4 Billion in Assets Every Hour

“In the past 8 weeks, central banks have been buying $2.4 billion per hour of financial assets.” How do you think this will end?

Charles Hugh Smith: “The Destruction of Demand”

“Reform is impossible, given the incentives, regulations, and vested interests whose sole purpose is to, in clay Shirky’s insightful phrase, ‘preserve the problem to which they are the solution.’”

CONCLUSIONS:

  • The “rain” of Fed created digital dollars will continue. No politician or central banker will stop the “rain.”
  • Those new dollars levitate stocks and enable the government to spend trillions on bailouts.
  • The increased currency in circulation is huge compared to the value of gold supposedly stored in Fort Knox. Gold is priced far too low.
  • The inevitable result will be consumer price inflation. An initial jolt of asset deflation is likely.
  • Many businesses and jobs are gone forever. Bailouts may help in the near-term, but don’t expect the economy to replace those bankrupt businesses and lost jobs. Bailouts will NOT replace production or ongoing revenues.
  • The gold to silver ratio has fallen from over 125 to about 100 in the past two months. That ratio should fall further as silver prices rise more rapidly than gold.
  • Gold prices bottomed in December 2015 at $1,051. Gold sells for over $1,700 (May 2020) in US dollars, and at all-time highs in most other currencies. Higher prices are inevitable for several years.

Miles Franklin will exchange digital currency units for real money—gold and silver bars and coins. Central banks are inflating, governments are spending, it is an election year, and the legislature is in session. Beware of central banks, governments, elections, and our legislature.

Buy silver. Buy gold.

Call Miles Franklin at 1-800-822-8080.

Gary Christenson

What’s Wrong with These Pictures?

Miles Franklin sponsored this article by Gary Christenson. The opinions are his and are not investment advice.

For the week ending May 15:

  • Silver rose $1.29 to $17.07 on the COMEX.
  • Gold rose $42.40 to $1,756 on the COMEX.
  • Gold to Silver ratio declined to 103.
  • The DOW fell 645 to 23,685.

“… the Fed sheepishly came out with a warning that asset prices are at risk to significant declines one minute after the market closed on Friday. Read here.

Our economic and political worlds have transitioned into a “Newer Normal.” Life will not return to 2019 status. It’s an election year so expect narratives, not truth.

What’s wrong with these pictures? What do they show?

Debt and GDP have diverged for over six decades. A financial reset that reduces debt – a massive default – might correct the imbalance.

The problem is debt: National debt, consumer debt, corporate debt, student loan debt, mortgage debt and more. Because our currency units are not real money, what else should we expect but the creation of runaway debt?

ECONOMIC ACTIVITY:

The COVID-19 economic shutdown has crushed the global economy. How many lives have been saved by the shutdown? On the other hand, how many tragedies—bankruptcies, unemployment, hunger, drug abuse, alcoholism, child abuse, and depression—have been created by the shutdown? Consider shipping, industrial production, retail sales, ECRI leading index, and employment:

Low interest rates enabled corporations to borrow $ trillions for stock buybacks to boost stock prices and management compensation. Debts today hurt tomorrow’s prosperity.

GE and Boeing borrowed billions and now beg for government bailouts.

  • GE stock prices: Dec. 2016 $30. Friday May 16: $5.49.
  • Boeing stock prices:  March 2019 $430. Friday May 16: $120.

Government spending: 2020 is the year for stimulus (aka life support), giveaways, bailouts, and help from the government. Stimulus bills have passed, and more will be implemented before election day 2020. Tax revenues are lower, but spending increased dramatically. Short-term bailouts can lead to long-term disasters.

Excessive spending creates unpayable debt, which requires additional bailouts to “paper over” the debt disaster. Low or negative interest rates are “necessary.” Bailouts and stimulus do NOT lead to economic strength, prosperity, and happy citizens.

The shutdown has caused over 35,000,000 Americans to become newly unemployed in less than two months. Unemployed workers probably don’t pay rent, mortgage payments, and credit card bills, which hurts the economy and those creditors expecting payment.

The “I can’t pay” problems ripple through the economy like cars winding around parking lots waiting for handouts from food banks.

THE CONCLUSION FROM THE ABOVE PICTURES:

THE MEDIA:

WHAT’S WRONG WITH THIS PICTURE?

THE COMING ELECTION:

  • Presidents who suffer through weak economies in their fourth year often are defeated.
  • Republicans want to boost the economy, tell happy stories, create bailouts, and levitate the stock market to regenerate optimism by November.
  • Democrats want to blame Republicans, weaken the economy to hurt Trump reelection, create massive bailouts, boost social programs, and promote a Democratic sweep in November.
  • Both parties will bombard the populace with bailouts, free stuff, and “Vote for me” nonsense.

BUT THE REALITY WILL BE:

a)Spending, not prosperity.

b) More debt, not prudent management.

c) Media hype, not truth.

d) Trauma ahead, regardless of which “party” is mismanaging the economy and government.

e) Temporary life support, not sustainable growth.

f) Crashing dollar purchasing power.

g) Loss of confidence in the Fed, government, and media.

WHAT ABOUT HONEST MONEY—GOLD AND SILVER?

  • Gold and silver can’t be created by The Fed or congressional actions. The financial and political elite discourage gold, silver, and real money in favor of debt. No surprise…
  • Since our economy runs on debt and credit, and debt is “going crazy,” the dollar and fiat currencies must devalue further. The “race to the bottom” is happening. Winners will be gold, silver, and real assets.
  • Gold reached all-time highs in most currencies and will reach a new high in dollars soon. Silver will move higher for several years.

How high gold and silver will rise depends upon:

  1. Fiscal and monetary insanity.
  2. Congressional fiscal mismanagement.
  3. Panic and fear regarding devaluing debt-based currencies.
  4. Out-of-control spending and debt creation.
  5. Lack of faith in central banks and government pronouncements.
  6. How long the economy remains on Fed induced life support.

Six Decades of M2 and Gold Prices – Quarterly data from St. Louis Fed.

CONCLUSIONS:

  • Much is wrong in our economic world. The Fed, fractional reserve banking, and debt-based currency units (“fake money”) create most of the problems.
  • Excessive debt and out-of-control spending are NOT prescriptions for wealth creation, prosperity, satisfied people, and booming economies.
  • Adding more debt to fix debt-based problems… you know the drill.
  • The media and government will concoct stories to explain everything. Portions of those stories may be true.
  • Inflate or die! The Fed must monetize government debt, devalue dollars, keep interest rates low, and inject trillions into the economy for life support. They will sacrifice the dollar before they weaken the stock and bond markets.
  • The “Newer Normal” will include massive unemployment, bankruptcies, a Greater Depression, asset deflation, consumer price inflation, hyperinflation, and misery for many.
  • Ultimately, the dollar, stock and bond markets will lose purchasing power. Gold and silver will thrive.

TRUST GOLD AND SILVER INSTEAD.

Miles Franklin sells gold and silver. Call them at 1-800-822-8080.

Gary Christenson

Inmates of The Hotel Eccles QE Rehab Facility

Miles Franklin sponsored this article by Gary Christenson. The opinions are his and are not investment advice.

Chairman Bernanke promised the Fed would unwind Fed purchases from the 2008 crisis. Now we know they can’t and won’t. The Fed balance sheet of created QE currency units will expand until a reset occurs.

When will increasing debt and the QE nonsense stop? Perhaps…

a) When a snowstorm devastates South Texas in August.

b) When the Fed begs forgiveness for its monumental sins.

c) When the US government balances its budget.

d) When global fiat Ponzi Schemes collapse.

e) When a huge financial reset occurs.

BOTTOM LINE:

Like the Eagles said in 1977:

“Welcome to the Hotel California… Relax, said the night man. We are programmed to receive. You can check out any time you like but you can never leave.”

The 2020 post COVID-19 pandemic version could be:

“Welcome to the Hotel Eccles… Relax, said the chairman. We are programmed to deceive. You can check out any time you like but you can never leave.” We have become inmates in the Hotel Eccles QE Rehab Facility because:

  • National debt and money supply must grow. Inflate or Die!
  • U.S. National Debt of $25 trillion can never be paid in today’s dollars. It must be defaulted or devalued. Expect a reset.
  • Government and the banking cartel want dollar devaluation, consumer price inflation and more debt. They will sacrifice the dollar to support the bond and stock markets.
  • The U.S. economy runs on debt and credit. Dollars are debts of the Federal Reserve. The U.S. government spends $ trillions over its revenues each year, so national debt must increase. In the absence of foreign and domestic buyers at artificially low interest rates, the Fed must monetize. QE4ever!
  • Dishonest dollars created from nothing spend like existing dollars, but they make existing dollars worth less, until they become worthless. Countries who pursued similar policies are Zimbabwe, Argentina, and Venezuela, bad precedents.
  • Oops! The consequences of monetizing $ trillions will be catastrophic, but we must not focus on those consequences in an election year.

From the Eagles: “This could be heaven, or this could be hell.”

Post COVID-19 Pandemic version: This will be heaven and hell. It will be (for a while) heaven for the political and financial elite and hell for the lower 90%. See below.

But we were told in January the economy was doing great. Now that claim is heard less than before the COVID-19 shutdown. Examples of the shutdown created mini reset from early 2020:

Summary: the US economy is not doing well. The stock market has been levitated by “easy money,” not fundamentals. Desperation, bankruptcies, and bailouts are prevalent. Employment and GDP are in free fall. The Fed monetizes debt because they must. “Helicopter money” floats down upon people, and most need more. Repo madness bailed out hedge funds. QE bails out Wall Street.

What About National debt?

Sept. 30, 2000    $5,674 billion

Sept. 30, 2005    $7,933 billion

Sept. 30, 2010    $13,562 billion

Sept. 30, 2015    $18,151 billion

May 6, 2020        $25,142 billion

Does this debt trend reassure anyone that “everything is good?” Does “well managed” describe our debt disaster? Which plan to control expenses, repay the debt, and strengthen the economy is best? Oops, the Fed and the US government have NO PLAN to control expenses or manage debt. Government will spend during 2020 (an election year) to support the economy, buy votes, levitate the stock market, and perpetuate a failing status quo.

  • Addressing an excessive debt problem with more debt is not a workable plan.
  • Because government and the Fed have no practical plan, INDIVIDUALS MUST HAVE A PLAN:

FACTS:

As M2 rises, gold and stocks become more expensive, because each dollar is worth less.

The stock market is over-valued, has corrected, and will probably fall more, even supported by QE induced levitation.

Stocks are too high. Gold and silver peaked in 2011 and have been rising for the past four years. Given that QE4ever is the “plan”, gold and silver must rally further. They have been money for millennia, retain their value, are trusted globally, are hated by central banks, despised by bankers, and discouraged by politicians.

BACKING CURRENCY UNITS WITH GOLD:

  • One alternative is to back dollars with gold, which will not happen soon. It’s possible the ruble or yuan will be backed by gold.
  • Pretend the US has the 261 million ounces of gold reserves as claimed. (Fort Knox and other locations.)
  • Assume the US backs M2 by gold at 40%. The price of gold would be around $20,000.

THOUGHTS:

  1. David Schectman: “Hyperinflation is a currency event.”
  2. Spend with fiat units, save with stacked gold and silver.
  3. The Fed has stated that QE is unlimited. Swell…
  4. The Fed is not supporting the economy. It is supporting the debt bubble.
  5. Chairman Powell: “Now is not the time to worry about debt.”
  6. The “shutdown” is a small reset. A larger reset is coming.
  7. Credit cards, auto loans and student loans each exceed $1 trillion in debt. What could go wrong?
  8. QE is like heroin. It feels good for a while, and then kills the addict.
  9. Fiat currencies failed in the past. Why will they be different this time?
  10. The Fed “prints” dollars by the trillions. The Fed can’t print gold. Which will increase in value during the next four years?

CONCLUSIONS:

  • Unemployment is high and getting worse. This recession/depression/reset creates more governmental expenses, less tax revenue, and cranky citizens.
  • The US government has addressed the economic shutdown with bailouts for businesses, checks for individuals, proposed infrastructure spending, more bailouts, social services, and… the list is long. These bailouts increased debt since governments have no savings.
  • Over $25 trillion in national debt and $75 trillion in total US debt will never be paid in 2020 dollars. Defaults and huge devaluations are coming. Got gold?
  • The Federal Reserve enables most of the debt increase via QE4ever— “printing” dollars and increasing their balance sheet. Yup, the plan is creating debt to fix our excessive debt catastrophe.
  • The Fed’s balance sheet will increase by many $ trillions in the next several years. Those new trillions will boost consumer prices, including food prices. Food shortages will make it worse.
  • Pensions are underfunded. The shutdown has damaged state and local budgets. The cries for expanded federal bailouts will intensify. More debt and QE are a tidal wave rushing toward us. We can never leave the Fed created QE Rehab Facility.
  • MMT—Magic Money Tree—policies will add trillions to debt. Gold prices will rise to $5,000 or $10,000 or $14,000 per ounce. When gold sells for $10,000 per ounce, what will a month’s food cost?
  • Maybe a larger reset will occur before gold prices reach five digits. Maybe a snowstorm will blanket South Texas next August. Maybe the Fed cares about the lower 90% of the US and will pursue policies to help them. However, a stack of gold and silver coins will be necessary if the Fed is more interested in bailing out Wall Street.
  • The Fed might do “the right thing” and back dollars with gold. But their history suggests they will exhaust ALL alternatives first. Crushing deflation and/or hyper-inflation, a “new dollar” worth a fraction of the 2020 dollar in purchasing power, wealth confiscations, and more are possible. Got gold?

Review the data on unemployment, gold prices paralleling M2, and increasing national debt. Are your savings and retirements protected from inflation and deflation, from devaluation and Fed policies, from bailouts and bail-ins from politicians and central bankers? Got gold?

Gold is expensive now. It will be more expensive after hyper-inflation or an economic reset.

Miles Franklin sells gold and silver. Call them at 1-800-822-8080. Silver is inexpensive in May 2020 compared to the price of gold, total debt, the price of the S&P 500 Index and more. Gold provides safety during stressful times. These stressful times are likely to become worse during the rest of 2020.

Protect your savings and retirements with gold and silver.

Gary Christenson

How Much Time Remains?

Miles Franklin sponsored this article by Gary Christenson. The opinions are his and are not investment advice.

BREAKING NEWS:

In the past six weeks 30 million Americans filed for unemployment. Tax revenues decline, consumer spending and company profits fall, and safety net spending for unemployment, welfare, “food stamps” etc. will increase. Net result—much larger deficits and more debt.

April 30, 2019:  National Debt = $22,027 trillion.

April 30, 2020:  National Debt = $24,974 trillion.  Oops!

More Debt: So What?

From Jerome Powell, the Chairman of the Fed: Now is not the time to worry about debt, but use the great fiscal powers of the US to avoid deeper damage to the economy.”

Translation: Expanding debt and deficits forever. Spend, spend, spend.

QUESTIONS:

  • Will a time come when we address the debt? Answer: Yes, but not in an election year.
  • The Fed (and other central banks) enabled the massive debt to increase by lowering interest rates to near zero, adding $20 trillion to their balance sheets (from nothing) and encouraging expansion of sovereign, corporate and individual debt. Will the Fed admit they caused most of the problem? Answer: Maybe, but not before snow falls on the Rio Grande in August.

Does anyone believe that 30 million newly unemployed workers bode well for markets, profits, and economic strength? Answer: No!

  • The Fed can create trillions (they do) and boost stock markets (they did). The Fed can purchase bonds (they do) and force interest rates lower (they do), but can The Fed create goods and services, productivity, infrastructure, food, energy, and other necessities? Answer: Of course not.
  • The Fed’s “answer” to most economic crises in the past five decades has been to reduce interest rates, inject liquidity, and claim they are saving the economy from problems they caused. Will this continue? Answer: Yes, for as long as politicians accept money from lobbyists and corporations.
  • Printing dollars and feeding them into the stock and bond markets will boost those markets for a time. Will it levitate them forever? Answer: No, but levitation can last a long time. Or maybe that game died in March.
  • Has the stock market turned lower? Answer: The charts (see below) show the top occurred in February.
  • But could the S&P rally and reach new all-time highs. Answer: Almost anything is possible, including snow on the Rio Grande, honest politicians, and truthful Fed statements. However, do you trust your savings and retirement funds invested in an overvalued stock market supported by QE4ever, buybacks and unpayable debt. That debt will default or be inflated to near zero in value.
  • What about gold and silver? Answer: You know the drill. They are real money, not debts from the Federal Reserve (dollars), not IOUs from dodgy corporations, not an unbacked currency unit that is falling toward zero purchasing power. The Fed can create inflation, but not gold.

CHARTS:

Gold prices on the COMEX have risen for 20 years as the dollar devalued. Gold, when priced in most currencies, sells at all-time highs. It will reach a new high in dollars in 2020 or 2021, depending on fiscal and monetary insanity, Fed “printing” and panic buying of real assets without counter-party risk.

Gold has risen since 2001 and will rise further as dollars are devalued by QE4ever and massive debt increases.

The DOW:

The DOW on a linear chart broke support since 2015. On the log chart it broke support since 2010.

Is it possible the DOW will, based on trillions of created dollars, rise back to its February glory days? Yes, but please contemplate the first, second and third-order consequences of 30 million unemployed workers, delinquent mortgage payments, unpaid rent, insolvent pension plans, and a congress that only understands borrow and spend solutions to economic problems.

RUSSELL 2000

What about the Russell 2000 Index? This broader index represents most stocks, not the narrow FAANG + Microsoft stocks.

Read: FAAMGs are up 10%, Remaining 495 Stocks are down 13%.

The Russell 2000 Index peaked in August 2018, before Repo-Madness, QE4ever, and $2 trillion of “printing” by the Fed. The stock advance since then has been increasingly narrow.

THE RUSSELL TO DOW RATIO:

The ratio shows that Russell 2000 stocks peaked, compared to the DOW, six years ago. Since then the Russell stocks have been weaker than the DOW. The narrow advance is worrisome.

SUMMARY:

Gold will rise as dollars are devalued, the Fed “prints” with QE4ever, and politicians spend borrowed dollars. The rally may become spectacular, like 1979—1980, as investors panic, realizing dollars are crashing in value. Some will demand real money—gold and silver.

The DOW has fallen through long-term support lines as the economy has shutdown, GDP is in free fall, and unemployment is skyrocketing.

The larger stock market, as represented by the Russell 2000, has been weaker than the narrow DOW. This was an early warning signal that stocks were topping, even though supported by Fed liquidity.

CONCLUSIONS:

  • GDP is falling. Unemployment is rising. The shutdown and excessive debt created a recession or depression.
  • Inflate or Die!
  • COVID-19 was the pin that burst the bubble of excessive debt, unreal expectations, and the crazy belief that The Fed can create wealth and prosperity by “printing” fake money.
  • The stock market peaked in February. A return to those levels, anytime soon, looks doubtful. Consider the charts, real economic traumas, and the oil business. Creating fake money that benefits the political and financial elite will not save the middle class or the real economy.
  • Massive debt, huge deficits, fear, and panic will weaken dollars. Devalued dollars may help support over-valued stocks, but they will push gold and silver prices to new highs.
  • Gold sells at all-time highs in most currencies. New highs, priced in dollars, will come soon.
  • Who would have believed (in January 2020) a 35% drop in the S&P 500 Index in five weeks? Who now believes that gold will reach $2,000 to $3,000 relatively soon? Bank of America… and others.
  • The stock market is supported by the Fed, but not fundamentals, strong earnings, rising GDP, increasing productivity, or stock buybacks. Does that worry you when we know the Fed only cares about the political and financial elite?
  • Buy gold. Buy silver. The stock market… You know the drill.

Miles Franklin does not print dollars. They understand real money, not the fake stuff created daily by our central bank. They will exchange currency units for gold and silver. Call 1-800-822-8080.

Gary Christenson