Miles Franklin sponsored this article by Gary Christenson. The opinions are his and are not investment advice.
The U.S. Presidential election occurs in less than a month. This silly season is crazier than usual. Politicians, central bankers, athletes, employees, and many people are wearing masks, often mandated my local edicts. Others are rioting and destroying property. People are fleeing large cities.
Half (or more) of the U.S. believes masks protect the wearer and others from the pandemic. The other half believes masks are largely useless, an invasion of personal freedoms, and mandated by politics, instead of intelligent and objective science.
That debate is above my paygrade. Regardless, the “Powers-That-Be” (PTB) will do what their political agendas require, even if their actions trash local economies. Let’s explore a few mask wearers and some consequences of their decisions.
But first, for the week ending October 8, 2020:
Gold (COMEX) rose $18 to $1,926.
Silver rose $1.08 to $25.11
The DOW rose 904 to 28,586.
10-year interest rate rose to 0.77%, from a March low of 0.4%.
Political nonsense increased to an unmeasurable level.
Politicians wear masks (in public), and demand that people “mask up” even though their mandates boost unemployment, destroy businesses, eliminate jobs, and MIGHT reduce infection and death rates. The media ignore “false positives,” medical authorities (including CDC and WHO) that doubt mask effectiveness, unnecessary deaths, and abuse resulting from “lockdowns.” Poor planning and not thinking extract a price.
WHAT WE KNOW FOR CERTAIN:
- Politicians and medical authorities have devastated portions of the global economy via “lockdowns.”
- Politicians and central bankers reacted to their destructive policies by creating dollars, euros, yen, pounds, and francs.
- Politicians forget that fake money can’t solve real problems. Fake money, those newly created dollars, can temporarily mask the consequences of bad policies, but “the piper must be paid.”
- Debt skyrockets higher. The U.S. official national debt surpassed $27 trillion. Total U.S. debt of $80 trillion cannot be paid with dollars of current value. Pick your poison—default (don’t pay, sorry, just kidding when we called it a loan) or massive inflation (repay with mini-dollars).
- Savers and pension plans earn nearly nothing on their money. Ugly consequences are coming.
- Elect Trump as President, and the debt rises rapidly. Elect Biden (Harris) as President, and the debt rises rapidly.
- Chairman Powell will “print” as needed. There will be harsh consequences.
National debt increased by $7 trillion since his inauguration in January 2017. Think more debt, no problem, make the stock market look good…
National debt increased by $25 trillion while she has served (since 1987) in congress, which supposedly manages the budget. Think ever-increasing debt and no management.
National debt increased by $6 trillion while he has been Chairman, and The Fed balance sheet (from “thin air”) increased by over $3 trillion. Think QE4ever, funny money, damn the consequences, bail out Wall Street, and Inflate or Die!
His policies have been partially responsible for “lockdowns,” over 50,000,000 Americans filing for unemployment, mask mandates, suicides, bankruptcies, and increased abuse of drugs and alcohol. Was he helping “Big Pharma,” himself, or the American public?
The Lone Ranger (fictional):
He lived with a strict moral code. “That sooner or later… somewhere… somehow… we must settle with the world and make payment for what we have taken.”
He used silver bullets! Think honesty, integrity, and concern for consequences.
QUESTION: Did President Trump, Speaker Pelosi, Chairman Powell, and Dr. Fauci watch The Lone Ranger? Did they fail to understand the simplicity, logic, and honesty of The Lone Ranger’s moral code?
QUESTION: Will President Trump, Speaker Pelosi, Chairman Powell, and Dr. Fauci “make payment for what we have taken?” Will that payment be acceptable to anyone outside the political and financial elite?
QUESTION: If debt cannot increase forever (it can’t!), what happens when the U.S. economy crashes into the debt-wall? Default of debt? Hyper-inflation of mini-dollars? A new gold standard that backs “novo-dollars” to restore confidence after the economic crash? Peace and prosperity for all? The Federal Reserve apologizes to the world for making a mess of our monetary systems? Congress refuses donations and payoffs?
QUESTION: Are President Trump, Speaker Pelosi, Chairman Powell, and Dr. Fauci aware that previous unbacked fiat currencies crashed because they were “over-printed,” as the dollar, euro (etc.) are over-printed today?
QUESTION: If a reset, crash, recession and/or depression are inevitable, what have YOU done to protect your assets?
QUESTION: Did gold and silver come to mind? If not, why not?
Many observers have noted the world is crazier than usual. The craziness exceeds typical silly season nonsense. The craziness is more than ultra-right-wing madness. The craziness is beyond ultra-left-wing lunacy. The craziness surpasses the normal lies told by the usual suspects. Consider:
Two examples of face mask craziness… (French Open and California)
WHAT ABOUT SILVER?
Countries used silver for thousands of years as money. It worked as money, kept its value, and individuals trusted silver.
Silver prices increased 26% in 2020Q3.
Federal Reserve Notes (debts of the Fed, NOT real money) have circulated since 1971 when President Nixon severed the last link between the U.S. dollar and gold. Since 1971 the dollar has declined in value from about 1/40th of an ounce to about 1/2000th of an ounce of gold. Prices for the S&P 500 Index, food, prescription drugs, cigarettes, wars, payoffs, and hundreds of other items have also increased.
Federal Reserve Notes do not maintain their purchasing power. Their devaluation is intentional and executed by the PTB. Plan accordingly unless you have senators and “K-Street” lobbyists on speed-dial.
As spending and debt increase, Fed Notes decline in value. As Fed Notes devalue, silver prices rise.
Silver prices are erratic, like pandemics and politicians. But as debt increases (a proxy for currency in circulation), so do silver prices. Examine the following linear and log-scale graphs of silver prices (based on annual average of daily prices from Kitco) and official national debt. I included estimates for debt and silver prices out to 2024.
National debt increases exponentially, a straight line on a log chart. Silver prices approximately follow that exponential increase. Note that the average silver price for 1980 was $16.39, but prices exceeded $50 for a short time in January. Another silver bubble is coming…
Make a five-period moving average of annual silver prices. The statistical correlation for 1970—2020 between national debt and the smoothed silver price is 0.80. As debt increases, silver prices increase.
The graphs above assume national debt increases to about $40 trillion in 2024. They assume silver prices average $115 in 2024. Silver might exceed $115 by a large margin, depending upon the actions of the above masked men, monetary craziness, and how rapidly the Fed and U.S. government devalue dollars.
From Bill Bonner: “Politicians Ignore Ballooning National Debt”
“The federal government now owes $27 trillion that it can’t pay. The country as a whole, including the private sector, owes $80 trillion… that it can’t pay.
“And the government has promised America’s 76 million baby boomers (and others) $210 trillion in unfunded “entitlements” – pension, medical, and Social Security benefits – that can’t be paid, either.
“Rather than man-up… and cut back on spending, both parties are committed to covering these unpayable debts by printing money – a policy that always leads to bankruptcy, poverty, depression, and inflation, as well as social and political chaos.”
From Alasdair Macleod: “Monetary Distortions of GDP in 2021”
“And despite the wealth destruction being wrought by currency debasement, in the coming months we will see monetary expansion deployed more aggressively. An inflationary solution cannot succeed…”
- Our politicians and central bankers like debt, irresponsible spending, and ignoring consequences. But debt inevitably rises, and prices increase.
- The Fed has created (from nothing) over $3 trillion in the past year to support Wall Street and government spending. A TINY portion of that $3 trillion trickled down to the lower 90% of Americans.
- Government and medical mandates trashed the U. S. economy for many businesses and people. The Fed and government have “printed” dollars to support the economy. They have not been successful.
- Fake money does not solve real problems, including unemployment, bankrupt businesses, homelessness, higher food prices, supply chain disruptions, lack of demand, and economic craziness.
- Silver prices track the increasing national debt, with wide deviations. Compared to (shown in other articles) total debt, the S&P 500 Index, national debt, and many others measures, silver prices remain low.
- Debt will increase. Silver prices will rise much further. How high and how fast will depend upon dollar weakness, Fed devaluation of the dollar, economic craziness, monetary stupidity, and QE4ever.
- Buy silver! There may be downside risk for a month or two, but prices will be far higher in 2021 than today. Silver sold for $4.01 in 2001. It is six times higher today. It will be six times higher again, probably well before the end of this decade.
Miles Franklin sells silver. Supplies are tight. Demand is strong because many people see the craziness, massive debt, and inevitable dollar devaluation. Silver protects the purchasing power of assets in the long term.