Since March, five major banks have collapsed. Pressure is building up in the economic system while our government crosses the Rubicon with how they handle policy. Something's going to blow.
Have you ever considered that the stock market now references its value as increasing due to the investment money that enters the market daily, the product of retirement and pension funds?
Ya. Good comment. I’ve heard this referred to by Bill Fleckenstein as the investment “robot” and he supports your theory that this is the only thing holding the market up. Passive flows.
One would think that as unemployment increases these passive flows will slow, but who knows. A massive % of the investing population has only seen up and up. And the vast majority of those have seen that through the lens of the 6% and the company match that flows into their 401k every month.
And we cannot forget the FEDs Plunge Protection Team. Some days they come in hung over from the night before, but on those days when the market seems poised for the big limit down day they go to work and all is well again.
As unemployment increase......passive flows will slow?
No. unemployment equals welfare........trillions of dollars being paid to various groups for a whole plethora of reasons made up as an excuse to hand out money. That money gets spent somewhere. Walmart, utility, rent, car payment, groceries, etc. that money is moving to some large corporate pocket like water looking for the lowest point. All government welfare ends up in the hands of the corptocracy.
Republicans have signed on to another $1.7 trillion in debt. The stawk market likes that government debt.
Maybe. But unemployment from the govt does not replace the 120k one was knocking down as a logistics Mgr at UPS. And it doesn’t replace the 10% passive flow coming out of the paycheck every month. Nor does it make the mortgage payment for the to big of a house you FOMOd into at 2.8% cause the rate was low. And now you can’t cover expenses on your wife’s salary. And your kid starts college in the fall.
Right now everything is in place except for the employment issue. Housing is going to roll over. Orders (ISM) on life support. Profits are mixed, but if you dig beneath the surface things are not good. The missing piece is employment. And it’s slowly getting there.
The last time unemployment bottomed in 2006. By late 2009 it was over 10%. Peaking a full year or more after both equities and housing fell off the cliff. Foreclosures peaked in 2010 and into 2011.
Everyone has memory holed what really happened from 2005-2012. Just like they have memory holed 1989-1996. And 1979-1983. 98% of the people who comment, even many of the ‘experts’ consistently get their fact wrong.
You can go all the way back to 1800 and look at every single cycle, once per generation give or take. And if you take the time you will find that it’s never different. Names and faces and flavors change. But in the end it always the same.
Could it be different this time? Sure. There are no certainties. Only probabilities. And those are extremely high that this time will be no different than all the other times.
As long as the banker will come out of the back room and hand more money out, the Monopoly game can go on forever.
I believe what you are referencing is called "flow" by all the overpaid analyst and quants out there. I have a buddy that says he has $250k in cash in his safe and doesn't know what to do with it. He is 70-ish and has land, assets, everything paid for. Won't risk it in the markets. He literally doesn't know what to do with it from an investment point. He is not "wealthy" by today's standards. If he has that kind of cash lying around and looking for a home, then you know there is tons out there of the trillions printed that need a place to land everyday. I think someone called it TINA.....There Is No Alternative.
Yes. Gold is the only thing I can come up with that the individual can do to preserve wealth in these situations.
When referring to TINA, I am speaking of the investments of the establishment. And gold should be around $5k a ounce right now. They are suppressing it so that people look for better returns........ aka TINA.
You probably understand as I do, that gold in not an investment. It is a store of value. I don't buy it to make money; I buy it to insure me against the devaluation of the money we use.
Find a neighborhood dealer who takes cash and puts it in his pocket wand sells at a reasonable price. APMEX et. al. report everything. This is especially important when you sell @ $10k . I'm an idiot and never do what I say. Just sayin'.
But, but, but...as Axios says, the Boomers started turning 70 in 2016, 10,000 a day. I just read that 6k die/day as well, (do the math) but at some point the TINA in effect since 2009 and as the result of ZIRP unwound at a torrid pace will result in (probably/maybe) selling and going to cash. Ya think? (I try not to)
The stawk market is nothing more than a massive psychological operation (psyop) used as control mechanism for the sheeple. Your article supports that premise if you just summarize what you said.
Summary: In the face of glaring facts and indicators that everything is wrong, the market just keeps holding its on or goes even higher.
There is no "market." To think that the common stock exchanges of our day represent people buying and selling as they research and learn about companies that are making profits due to their product line, management teams, advantage over competition, cash flows, debt to asset ratios, PE, price to sales ratios, etc is a demonstration of an inability to think. Not saying you fall into that category. I am talking about the populace as a whole. 98.4% of the sheeple in this country have no idea what is going on around them.
Anyone with any sophistication of market mechanism knows that a handful of companies like FAANGS, the VIX, or S&P futures can single handedly move the "markets" one way or the other. Everyone is familiar with the concept of the PPT......plunge protection team. Then when you factor in all the program buying and selling......algorithms.......and what I believe exist in the outright posting of numbers by manual manipulation, there is NO WAY what we see today is a "market" based on buying and selling of "supply and demand."
Just look at what is happening. Things are blowing up, melting down, coming unraveled..... So how do you get the sheeple to just ignore those events and keep on grazing? You run a flag.....called the stawk market....... up the pole they can all take a quick glance at and assume everything is awesome. There are a couple of generations out there right now that believe banks can go under, energy giants like ExxonMobil could go bankrupt, 50% of the country can go on welfare, and people can quit paying their mortgages, car loans, college loans, rent, utility bills, and be paid just to stay home.......and as long as AAPL, MSFT, GOOG, Meta, NFLX, AMZN, TSLA, NVDA are doing fine, then the world is fine.
Sheeple look at their retirement and 401k, and as long as they are going up, everything is awesome. They will be oblivious to everything else as long as they believe they are making money.....getting somewhere. Our entire society has been bought off. Money is a means of control. There is only a small portion of us that are "working" and trying to make our own way. Everyone else is on the take.....and in reality the money we "working" people are making is money we get from the people that have been bought off by "control money," therefore, we are caught up in benefiting from the "control money" indirectly. The day is quickly approaching where any money you "earn" or "make" will be earned or made from a source of government handout. We are close now. I have said multiple times that if the welfare was cut off, Walmart would be bankrupt in two weeks. Think of all the welfare that Walmart collects and calls it "capitalism."
We cannot look simply from the perspective of money and economy and understand what is going on in our world. If money is a control mechanism, what is the purpose of the control? Take a look around. Here's just one example. People are being forced.....by their government and employers......to agree that a man can be a woman or a woman can be a man. Why? So that the entire society can be conditioned to be told what to think.......no matter how fkg ridiculous it is. People can be told a LIE and made to go along with it. We are on a fast track of, "Agree with us, parrot what we tell you to say, never even think of disagreeing or dissenting........or we will cut your money off."
Freedom is the ability to make choices. In our society, money gives you the ability to make choices. Money is a medium of freedom. Build a society where 90% of the sheeple have to buy everything (food, water, clothing, energy, transportation, etc.), and the other 10 percent (the corporate oligarchy) are in control of all the production and sales.....and......they are part of the scheme to control and limit the freedom of the other 90%,.........and a small group can use the money to control millions. Money is the control mechanism of the military, the government, elections, foreign policy, etc.
When you can see that that scenario is playing out right before your eyes, then you will understand how the things we call "fundamentals of economy" can be non-existent, and the stawk market can hit another all-time high.
As always I appreciate QTR's input. I completely agree with you. I personally like the junior miners like $GDXJ and $SILJ. I think that they are poised to benefit the most. Specifically because there is a lot of M&A and consolidation that needs to happen in the sector. I just wrote an article about this on my substack.
There is real wisdom in this thread and in the main post. I would suggest that ETH is another place that could see upside due to the circumstances you've brilliantly set out. ETH has a strong use case and a solid development base, and under certain circumstance (i.e., staking) it pays a nice yield.
Trust in a currency is like trust in any relationship. Without it, you don't have a relationship. The blind guides running our economic house of cards have squandered that trust on an international basis like dementia Joe has abused the SPR for political points. In the very near future we are going to show up at the international market and the seller is going to say, "no thanks - I don't trust your weaponized, toxic fiat - gold only". At which point the term "and suddenly" will harken back to the days of Lehman.
I've invested through several gold price runups, and was frustrated each time that the miners' stock price languished - or even fell. It's a small club, and they buy each other out (merge or buy deposits), issue stock like crazy - diluting shareholders but making themselves wealthier by soaking up huge numbers of new issue for executive stock options (not, heaven forbid, for the employees actually doing the digging). And worst of all, at the first sign of a price run-up, they sell their production forward for several years, and you watch the price run up for those several while the miners' revenue stream (forward earnings) stays constant. I vowed 'never again'
Don't believe me? Bring up the 'forever chart' back to before 2007 on Fidelity or whoever you use and pull up the graph of GDX and GLD (the fund that holds actual gold in vaults).
It's an eye-opener!
Mark Twain: "A gold mine is a hole in the ground with a liar standing next to it."
The miners took a huge dump once the 2008 crash got going, the more speculative issues -90%. The carefully-crafted gold/miner portfolio that was supposed to make me really rich in the crash actually had the opposite effect. Thankfully in 2009-10 there was real estate to buy on the super cheap. Buy your miners AFTER the crash not before.
"Gold is money. Everything else is credit." - JP Morgan
And don't think he didn't know what he was talking about. Every dollar in our system is a dollar of debt. Don't think so? Take a box, put a couple of ounces of gold in it along with a couple of thousand dollars. Come back to it in 20 years and let us know which one is still holding its value. Every day, you dollars are worth less than they were the day before.
JPMorgan has spoken a lot so far. So I don't think that one word is historically valuable. Anyway, I agree with the writer that the dollar will collapse.
However, there is a lack of evidence as to why it is a rise in gold prices. What you're saying is based on the basis that gold increases when the dollar falls. However, the current status is stagflation, which is why the Fed is raising interest rates.
Raising interest rates slows down money. This lowers the price of all the basic items. So I don't think there's a direct link between the dollar value and the price of gold. Indirectly, rather, the opposite of what you're saying is that the dollar's depreciation and the gold price's depreciation are correlated.
As a result, the fall of gold and dollars, which were considered historically safe assets, is also expected.
There is no lack of evidence for the rise in gold prices. Central banks have been net buyers of gold since 2008.
Maybe you should go see how much money has been "printed" in the last decade. If you just use the major central banks like the Fed, ECB, BOJ, BOE, PBC....it's around $120 trillion.
Gold should be at $5k....at least....but is being artificially supressed so that the average sheeple won't notice.
When currencies fail.....and they always do.....gold is king.
During the 2008 financial crisis, quantitative easing and stocks fell and rose again. Again, interest rate hikes are slowing money down and inflation is coming down now.
The 2008 financial crisis will be a bump in the road compared to what is coming down the pike.
Interest rate hikes are slowing the money. Inflation is still high......way higher than they are reporting.
In the decade of the 1990s, the US ran a total deficit of $1.3 trillion for the decade. In the decade of the 2000s, the US ran a total deficit of $3.4 trillion. In the decade of the 2010s, the US ran a deficit of $8.2 trillion. In the decade of the 2020s.......at only 3 1/2 years into the decade.......the US has run a deficit of $8.4 tillion dollars. In the last 24 years we have run a total deficit of over $20 trillion dollars. Raising rates a quarter point here and there isn't going to stop inflation.
You need to check out gold in all the other currencies in the world. Then you will get an idea of what is about to happen to gold priced in dollars. When the dollar gods can no longer control energy markets.....coming real soon......and the dollar loses it's dominance in the world financial markets, gold will rediscover its value in dollars. People like you are going to be shocked.
Well yes, but...You used dollars to buy the gold. If you put the dollars into dollar denominated assets in almost any category since 1900, the investment would be worth far more than gold in Fiat. The Dow, housing, land (except in Baltimore), timber, oil, etc.
Almost any category? Hardly. Throughout the centuries there have been hundreds of items that have become worthless for everyone that increased in value. That cannot and will never be said of gold or silver.
Gold is not an investment, it is a store of value. A '68 Camaro is not a store of value; neither did anyone in 1968 imagine that 60 years later it would be worth 4-5 times what it was worth new. The Camaro is a story of want/desire, and not value. Gold is a story of value.........intrinsic value. You don't see anyone today buying a warehouse full of some new model in the hopes of making a huge return 50 years from now. How many other models were made in 1968 that no one cares about or can even name?
Let's compare "apples to apples." If it was 1970 and your grandfather was going to put something in a lock box for you to have one day, would you want him to put 10 oz of gold into that lock box or the $350 it would take to buy the gold in 1970? Your point about dollar "denominated assets" makes my point. Gold hasn't gone up in dollars; the dollar has gone down priced in gold. Gold is just gold. Did the '68 Camaro go up in dollars or did the dollar go down in relation to the Camaro?
There was a time that people took paper money only because they could go to the bank on which that paper was issued and get the value in gold. People desired to gather their wealth in stacks of physical metal. Today, people collect gold/silver/etc. in the hopes of trading it in for more paper. For thousands of years, wealth was measured in gold and silver.......actually held. Today, it is measured in digits or pieces of paper.......or even outright debt.
Have we really prospered under this new regime or perspective.......or is that just what we have been told.
The states allowed a Federal Government.......but they never intended to be ruled by it. But it happened.......and that in no way changed the intent.
People with gold and silver allowed the banksters to issue paper receipts on that gold and silver............but they never intended that the banksters use the paper to rule them. But it happened........and that changed everything.
My personal summary on the topic is that I know of no other medium or store of value to protect any savings I have, from inflationary confiscation due to dollar devaluation. I am sure there are things I could get lucky with, but if the last 5,000 years are an indicator, gold is a guaranteed lifeboat. Not saying it is perfect......nor am I saying that my dinky lifeboat will be a pleasure cruise on a raging stormy see of what might be coming........but I am saying I have no better ideas.
The inertia in this system is beyond the comprehension of most observers however according to the definition of a system, "a set of principles or procedures according to which something is done; an organized framework or method:" systems collapse when the principles are violated (fraud) or the procedures become subjective (politics). These aberrations manifest as instability and lead to systemic failure.
Spot on. We have normalized bank failures and are socializing losses through government “loans” that will never be paid back. Banks will continue to consolidate, leading to worse service (have you tried sending a wire transfer lately) and more government overreach into your financial life. This is the trend I see.
This is the most rational offering you've offered to date. Free of the usual Libertarian and ultra conservative talking points this financial/markets commentary is on target no matter one's politics. Both major political parties have been drinking from the same punch bowl, using during arguments for increasing the national debt, for a couple of lifetimes now. This writer believes you're on target. How close to the bullseye is yet to be seen.
You simultaneously covered both the attractive qualities that make gold an alternative solution (scarce; cost of production; track record), and exactly why it would fail at achieving individual wealth sovereignty (prone to confiscation; illiquid; third-party security). Very happy to hear that Larry Lepard has caught your ear on Bitcoin- which solves these issues while keeping the exact same commodity properties as gold (albeit in a digital space).
Also, if you were to sell your gold or miner equities in that sweet spot before nationalisation of miners- what exactly are you selling it for? Isn't the rationale for this exact price action in gold that the conventional currency is doomed / inflated / mistrusted ...
There are huge sums of money from overseas flooding into US assets right now out of fear keeping prices high as well. As Europe and Japan go into bankruptcy capital will flow in panic to the US like it did during WW2 as we are the best looking horse in the glue factory. It will drive the perceived, safest large US stocks quite a bit higher.
The US Treasury market is 10 x bigger than the stock market, where will all of that money go as we either default or print to infinity? Its going to go to the largest safest DOW blue chip stocks, the BRIC countries cannot even begin to handle these massive sums of money. Would you feel comfortable parking tens of trillions of dollars in China, India, Brazil and Russia?
But when the hyperinflation of the USD makes fuels too expensive for the power companies to buy, and the consumers of electricity, both homes and businesses of all kinds cannot afford to pay their light bills, what will happen to the banks? Don't the bank's computers run on electricity? How about the smart phones and card readers that are used to make purchases? EVERYTHING that either runs on or is dependent upon electricity in any way, will stop operating! ALL of the cryptos will go back to where they came from, which is nowhere! Without electricity to run the water pumps and processing plants, where will you get any water to drink? Where will you buy your food from? How will you get anywhere, if you have a place to go to? If you get stuck somewhere that is more than about 8 hours walking time away from your home, your chances of getting there will be almost nil!
Like I warned earlier in comments: "The board of Australia's Newcrest Mining has recommended the latest takeover offer of bigger sector player Newmont, which last month valued the target company at $19.5 billion." I haven't seen one in the last 30 years that resulted in higher stock value for investors down the pike. As the gold price rises, there will be more - when you dig through details, with huge payouts to acquired company's managements.
I very much agree with everything you say, but I would like to add one comment regarding Brent Johnson's "milkshake theory". I certainly don't want to speak for Brent, but from what I understand of his theory, he believes that the dollar will maintain its value against a basket of other currencies until it doesn't. In other words, there will come a point where people around the world no longer want the dollar. At that point. some of them will sell out of the dollar into a BRICS coin or into their own fiat currency or into gold, etc., but many of them will bring their dollars to the US and use them to buy anything and everything. The flood of euro-dollars added on top of the massive amount of dollars printed (and to be printed) by the Fed will lead to hyper-inflation in the US and the eventual collapse of the dollar. So, not only with the dollar depreciate against gold as you say, but it will depreciate against all other currencies at the same time.
There are 12 trillion dollars floating around outside the US. After many years, decades even of the demise of the dollar 88% of all transactions worldwide are settled in dollars. Truly the cleanest shirt in a pile of dirty ones. The Euro? Pure imagination! Yuan? Not convertible no rule of law in PRC. Same with Ruble. Yen? Going to 300 per dollar. Amirite?
Have you ever considered that the stock market now references its value as increasing due to the investment money that enters the market daily, the product of retirement and pension funds?
Ya. Good comment. I’ve heard this referred to by Bill Fleckenstein as the investment “robot” and he supports your theory that this is the only thing holding the market up. Passive flows.
One would think that as unemployment increases these passive flows will slow, but who knows. A massive % of the investing population has only seen up and up. And the vast majority of those have seen that through the lens of the 6% and the company match that flows into their 401k every month.
And we cannot forget the FEDs Plunge Protection Team. Some days they come in hung over from the night before, but on those days when the market seems poised for the big limit down day they go to work and all is well again.
As unemployment increase......passive flows will slow?
No. unemployment equals welfare........trillions of dollars being paid to various groups for a whole plethora of reasons made up as an excuse to hand out money. That money gets spent somewhere. Walmart, utility, rent, car payment, groceries, etc. that money is moving to some large corporate pocket like water looking for the lowest point. All government welfare ends up in the hands of the corptocracy.
Republicans have signed on to another $1.7 trillion in debt. The stawk market likes that government debt.
Maybe. But unemployment from the govt does not replace the 120k one was knocking down as a logistics Mgr at UPS. And it doesn’t replace the 10% passive flow coming out of the paycheck every month. Nor does it make the mortgage payment for the to big of a house you FOMOd into at 2.8% cause the rate was low. And now you can’t cover expenses on your wife’s salary. And your kid starts college in the fall.
Right now everything is in place except for the employment issue. Housing is going to roll over. Orders (ISM) on life support. Profits are mixed, but if you dig beneath the surface things are not good. The missing piece is employment. And it’s slowly getting there.
The last time unemployment bottomed in 2006. By late 2009 it was over 10%. Peaking a full year or more after both equities and housing fell off the cliff. Foreclosures peaked in 2010 and into 2011.
Everyone has memory holed what really happened from 2005-2012. Just like they have memory holed 1989-1996. And 1979-1983. 98% of the people who comment, even many of the ‘experts’ consistently get their fact wrong.
You can go all the way back to 1800 and look at every single cycle, once per generation give or take. And if you take the time you will find that it’s never different. Names and faces and flavors change. But in the end it always the same.
Could it be different this time? Sure. There are no certainties. Only probabilities. And those are extremely high that this time will be no different than all the other times.
Stonks. Get it right, lol...
Right. Either or in clown world.
As long as the banker will come out of the back room and hand more money out, the Monopoly game can go on forever.
I believe what you are referencing is called "flow" by all the overpaid analyst and quants out there. I have a buddy that says he has $250k in cash in his safe and doesn't know what to do with it. He is 70-ish and has land, assets, everything paid for. Won't risk it in the markets. He literally doesn't know what to do with it from an investment point. He is not "wealthy" by today's standards. If he has that kind of cash lying around and looking for a home, then you know there is tons out there of the trillions printed that need a place to land everyday. I think someone called it TINA.....There Is No Alternative.
GOLD
Yes. Gold is the only thing I can come up with that the individual can do to preserve wealth in these situations.
When referring to TINA, I am speaking of the investments of the establishment. And gold should be around $5k a ounce right now. They are suppressing it so that people look for better returns........ aka TINA.
You probably understand as I do, that gold in not an investment. It is a store of value. I don't buy it to make money; I buy it to insure me against the devaluation of the money we use.
Correct. But I believe that many people have bought into the gold traders' marketing ploy that it is an "investment."
It is no more of an investment than any one currency that goes up or down for various reasons.
Will it pay off if the dollar or other currency in which you are paid collapses? Of course. But that's just insurance, not an investment.
Find a neighborhood dealer who takes cash and puts it in his pocket wand sells at a reasonable price. APMEX et. al. report everything. This is especially important when you sell @ $10k . I'm an idiot and never do what I say. Just sayin'.
But, but, but...as Axios says, the Boomers started turning 70 in 2016, 10,000 a day. I just read that 6k die/day as well, (do the math) but at some point the TINA in effect since 2009 and as the result of ZIRP unwound at a torrid pace will result in (probably/maybe) selling and going to cash. Ya think? (I try not to)
The stawk market is nothing more than a massive psychological operation (psyop) used as control mechanism for the sheeple. Your article supports that premise if you just summarize what you said.
Summary: In the face of glaring facts and indicators that everything is wrong, the market just keeps holding its on or goes even higher.
There is no "market." To think that the common stock exchanges of our day represent people buying and selling as they research and learn about companies that are making profits due to their product line, management teams, advantage over competition, cash flows, debt to asset ratios, PE, price to sales ratios, etc is a demonstration of an inability to think. Not saying you fall into that category. I am talking about the populace as a whole. 98.4% of the sheeple in this country have no idea what is going on around them.
Anyone with any sophistication of market mechanism knows that a handful of companies like FAANGS, the VIX, or S&P futures can single handedly move the "markets" one way or the other. Everyone is familiar with the concept of the PPT......plunge protection team. Then when you factor in all the program buying and selling......algorithms.......and what I believe exist in the outright posting of numbers by manual manipulation, there is NO WAY what we see today is a "market" based on buying and selling of "supply and demand."
Just look at what is happening. Things are blowing up, melting down, coming unraveled..... So how do you get the sheeple to just ignore those events and keep on grazing? You run a flag.....called the stawk market....... up the pole they can all take a quick glance at and assume everything is awesome. There are a couple of generations out there right now that believe banks can go under, energy giants like ExxonMobil could go bankrupt, 50% of the country can go on welfare, and people can quit paying their mortgages, car loans, college loans, rent, utility bills, and be paid just to stay home.......and as long as AAPL, MSFT, GOOG, Meta, NFLX, AMZN, TSLA, NVDA are doing fine, then the world is fine.
Sheeple look at their retirement and 401k, and as long as they are going up, everything is awesome. They will be oblivious to everything else as long as they believe they are making money.....getting somewhere. Our entire society has been bought off. Money is a means of control. There is only a small portion of us that are "working" and trying to make our own way. Everyone else is on the take.....and in reality the money we "working" people are making is money we get from the people that have been bought off by "control money," therefore, we are caught up in benefiting from the "control money" indirectly. The day is quickly approaching where any money you "earn" or "make" will be earned or made from a source of government handout. We are close now. I have said multiple times that if the welfare was cut off, Walmart would be bankrupt in two weeks. Think of all the welfare that Walmart collects and calls it "capitalism."
We cannot look simply from the perspective of money and economy and understand what is going on in our world. If money is a control mechanism, what is the purpose of the control? Take a look around. Here's just one example. People are being forced.....by their government and employers......to agree that a man can be a woman or a woman can be a man. Why? So that the entire society can be conditioned to be told what to think.......no matter how fkg ridiculous it is. People can be told a LIE and made to go along with it. We are on a fast track of, "Agree with us, parrot what we tell you to say, never even think of disagreeing or dissenting........or we will cut your money off."
Freedom is the ability to make choices. In our society, money gives you the ability to make choices. Money is a medium of freedom. Build a society where 90% of the sheeple have to buy everything (food, water, clothing, energy, transportation, etc.), and the other 10 percent (the corporate oligarchy) are in control of all the production and sales.....and......they are part of the scheme to control and limit the freedom of the other 90%,.........and a small group can use the money to control millions. Money is the control mechanism of the military, the government, elections, foreign policy, etc.
When you can see that that scenario is playing out right before your eyes, then you will understand how the things we call "fundamentals of economy" can be non-existent, and the stawk market can hit another all-time high.
Great comment.
As always I appreciate QTR's input. I completely agree with you. I personally like the junior miners like $GDXJ and $SILJ. I think that they are poised to benefit the most. Specifically because there is a lot of M&A and consolidation that needs to happen in the sector. I just wrote an article about this on my substack.
There is real wisdom in this thread and in the main post. I would suggest that ETH is another place that could see upside due to the circumstances you've brilliantly set out. ETH has a strong use case and a solid development base, and under certain circumstance (i.e., staking) it pays a nice yield.
Excellent summary.
Trust in a currency is like trust in any relationship. Without it, you don't have a relationship. The blind guides running our economic house of cards have squandered that trust on an international basis like dementia Joe has abused the SPR for political points. In the very near future we are going to show up at the international market and the seller is going to say, "no thanks - I don't trust your weaponized, toxic fiat - gold only". At which point the term "and suddenly" will harken back to the days of Lehman.
Great points.
I've invested through several gold price runups, and was frustrated each time that the miners' stock price languished - or even fell. It's a small club, and they buy each other out (merge or buy deposits), issue stock like crazy - diluting shareholders but making themselves wealthier by soaking up huge numbers of new issue for executive stock options (not, heaven forbid, for the employees actually doing the digging). And worst of all, at the first sign of a price run-up, they sell their production forward for several years, and you watch the price run up for those several while the miners' revenue stream (forward earnings) stays constant. I vowed 'never again'
Don't believe me? Bring up the 'forever chart' back to before 2007 on Fidelity or whoever you use and pull up the graph of GDX and GLD (the fund that holds actual gold in vaults).
It's an eye-opener!
Mark Twain: "A gold mine is a hole in the ground with a liar standing next to it."
The miners took a huge dump once the 2008 crash got going, the more speculative issues -90%. The carefully-crafted gold/miner portfolio that was supposed to make me really rich in the crash actually had the opposite effect. Thankfully in 2009-10 there was real estate to buy on the super cheap. Buy your miners AFTER the crash not before.
There is no reason to buy gold, except that it has been spotlighted as a safe asset in the past.
Bitcoin also seems to have gone up because of Fed's emergency loans, and I think it's going to go down again soon.
"Gold is money. Everything else is credit." - JP Morgan
And don't think he didn't know what he was talking about. Every dollar in our system is a dollar of debt. Don't think so? Take a box, put a couple of ounces of gold in it along with a couple of thousand dollars. Come back to it in 20 years and let us know which one is still holding its value. Every day, you dollars are worth less than they were the day before.
JPMorgan has spoken a lot so far. So I don't think that one word is historically valuable. Anyway, I agree with the writer that the dollar will collapse.
However, there is a lack of evidence as to why it is a rise in gold prices. What you're saying is based on the basis that gold increases when the dollar falls. However, the current status is stagflation, which is why the Fed is raising interest rates.
Raising interest rates slows down money. This lowers the price of all the basic items. So I don't think there's a direct link between the dollar value and the price of gold. Indirectly, rather, the opposite of what you're saying is that the dollar's depreciation and the gold price's depreciation are correlated.
As a result, the fall of gold and dollars, which were considered historically safe assets, is also expected.
There is no lack of evidence for the rise in gold prices. Central banks have been net buyers of gold since 2008.
Maybe you should go see how much money has been "printed" in the last decade. If you just use the major central banks like the Fed, ECB, BOJ, BOE, PBC....it's around $120 trillion.
Gold should be at $5k....at least....but is being artificially supressed so that the average sheeple won't notice.
When currencies fail.....and they always do.....gold is king.
Why is the current price of gold falling?
During the 2008 financial crisis, quantitative easing and stocks fell and rose again. Again, interest rate hikes are slowing money down and inflation is coming down now.
The 2008 financial crisis will be a bump in the road compared to what is coming down the pike.
Interest rate hikes are slowing the money. Inflation is still high......way higher than they are reporting.
In the decade of the 1990s, the US ran a total deficit of $1.3 trillion for the decade. In the decade of the 2000s, the US ran a total deficit of $3.4 trillion. In the decade of the 2010s, the US ran a deficit of $8.2 trillion. In the decade of the 2020s.......at only 3 1/2 years into the decade.......the US has run a deficit of $8.4 tillion dollars. In the last 24 years we have run a total deficit of over $20 trillion dollars. Raising rates a quarter point here and there isn't going to stop inflation.
You need to check out gold in all the other currencies in the world. Then you will get an idea of what is about to happen to gold priced in dollars. When the dollar gods can no longer control energy markets.....coming real soon......and the dollar loses it's dominance in the world financial markets, gold will rediscover its value in dollars. People like you are going to be shocked.
Gold is equal to dollars. Blind faith in something is likely to cause the same failure as now.
Well yes, but...You used dollars to buy the gold. If you put the dollars into dollar denominated assets in almost any category since 1900, the investment would be worth far more than gold in Fiat. The Dow, housing, land (except in Baltimore), timber, oil, etc.
Almost any category? Hardly. Throughout the centuries there have been hundreds of items that have become worthless for everyone that increased in value. That cannot and will never be said of gold or silver.
Gold is not an investment, it is a store of value. A '68 Camaro is not a store of value; neither did anyone in 1968 imagine that 60 years later it would be worth 4-5 times what it was worth new. The Camaro is a story of want/desire, and not value. Gold is a story of value.........intrinsic value. You don't see anyone today buying a warehouse full of some new model in the hopes of making a huge return 50 years from now. How many other models were made in 1968 that no one cares about or can even name?
Let's compare "apples to apples." If it was 1970 and your grandfather was going to put something in a lock box for you to have one day, would you want him to put 10 oz of gold into that lock box or the $350 it would take to buy the gold in 1970? Your point about dollar "denominated assets" makes my point. Gold hasn't gone up in dollars; the dollar has gone down priced in gold. Gold is just gold. Did the '68 Camaro go up in dollars or did the dollar go down in relation to the Camaro?
There was a time that people took paper money only because they could go to the bank on which that paper was issued and get the value in gold. People desired to gather their wealth in stacks of physical metal. Today, people collect gold/silver/etc. in the hopes of trading it in for more paper. For thousands of years, wealth was measured in gold and silver.......actually held. Today, it is measured in digits or pieces of paper.......or even outright debt.
Have we really prospered under this new regime or perspective.......or is that just what we have been told.
The states allowed a Federal Government.......but they never intended to be ruled by it. But it happened.......and that in no way changed the intent.
People with gold and silver allowed the banksters to issue paper receipts on that gold and silver............but they never intended that the banksters use the paper to rule them. But it happened........and that changed everything.
My personal summary on the topic is that I know of no other medium or store of value to protect any savings I have, from inflationary confiscation due to dollar devaluation. I am sure there are things I could get lucky with, but if the last 5,000 years are an indicator, gold is a guaranteed lifeboat. Not saying it is perfect......nor am I saying that my dinky lifeboat will be a pleasure cruise on a raging stormy see of what might be coming........but I am saying I have no better ideas.
The inertia in this system is beyond the comprehension of most observers however according to the definition of a system, "a set of principles or procedures according to which something is done; an organized framework or method:" systems collapse when the principles are violated (fraud) or the procedures become subjective (politics). These aberrations manifest as instability and lead to systemic failure.
Spot on. We have normalized bank failures and are socializing losses through government “loans” that will never be paid back. Banks will continue to consolidate, leading to worse service (have you tried sending a wire transfer lately) and more government overreach into your financial life. This is the trend I see.
The big banks are essentially an extension of government. They are so hyper-regulated they are scared of their own shadow.
When I withdraw more than $2k in cash, I feel like the bank teller is a government employee readying her report for the Agency That Watches.
This is the most rational offering you've offered to date. Free of the usual Libertarian and ultra conservative talking points this financial/markets commentary is on target no matter one's politics. Both major political parties have been drinking from the same punch bowl, using during arguments for increasing the national debt, for a couple of lifetimes now. This writer believes you're on target. How close to the bullseye is yet to be seen.
I'm curious...what do you consider to be "ultra conservative?"
You simultaneously covered both the attractive qualities that make gold an alternative solution (scarce; cost of production; track record), and exactly why it would fail at achieving individual wealth sovereignty (prone to confiscation; illiquid; third-party security). Very happy to hear that Larry Lepard has caught your ear on Bitcoin- which solves these issues while keeping the exact same commodity properties as gold (albeit in a digital space).
Also, if you were to sell your gold or miner equities in that sweet spot before nationalisation of miners- what exactly are you selling it for? Isn't the rationale for this exact price action in gold that the conventional currency is doomed / inflated / mistrusted ...
There are huge sums of money from overseas flooding into US assets right now out of fear keeping prices high as well. As Europe and Japan go into bankruptcy capital will flow in panic to the US like it did during WW2 as we are the best looking horse in the glue factory. It will drive the perceived, safest large US stocks quite a bit higher.
The US Treasury market is 10 x bigger than the stock market, where will all of that money go as we either default or print to infinity? Its going to go to the largest safest DOW blue chip stocks, the BRIC countries cannot even begin to handle these massive sums of money. Would you feel comfortable parking tens of trillions of dollars in China, India, Brazil and Russia?
But when the hyperinflation of the USD makes fuels too expensive for the power companies to buy, and the consumers of electricity, both homes and businesses of all kinds cannot afford to pay their light bills, what will happen to the banks? Don't the bank's computers run on electricity? How about the smart phones and card readers that are used to make purchases? EVERYTHING that either runs on or is dependent upon electricity in any way, will stop operating! ALL of the cryptos will go back to where they came from, which is nowhere! Without electricity to run the water pumps and processing plants, where will you get any water to drink? Where will you buy your food from? How will you get anywhere, if you have a place to go to? If you get stuck somewhere that is more than about 8 hours walking time away from your home, your chances of getting there will be almost nil!
How can the electricity issue be solved? Who will solve it? I worked for SoCal Edison for 15 years, so I know a few things about the subject.
Like I warned earlier in comments: "The board of Australia's Newcrest Mining has recommended the latest takeover offer of bigger sector player Newmont, which last month valued the target company at $19.5 billion." I haven't seen one in the last 30 years that resulted in higher stock value for investors down the pike. As the gold price rises, there will be more - when you dig through details, with huge payouts to acquired company's managements.
I very much agree with everything you say, but I would like to add one comment regarding Brent Johnson's "milkshake theory". I certainly don't want to speak for Brent, but from what I understand of his theory, he believes that the dollar will maintain its value against a basket of other currencies until it doesn't. In other words, there will come a point where people around the world no longer want the dollar. At that point. some of them will sell out of the dollar into a BRICS coin or into their own fiat currency or into gold, etc., but many of them will bring their dollars to the US and use them to buy anything and everything. The flood of euro-dollars added on top of the massive amount of dollars printed (and to be printed) by the Fed will lead to hyper-inflation in the US and the eventual collapse of the dollar. So, not only with the dollar depreciate against gold as you say, but it will depreciate against all other currencies at the same time.
There are 12 trillion dollars floating around outside the US. After many years, decades even of the demise of the dollar 88% of all transactions worldwide are settled in dollars. Truly the cleanest shirt in a pile of dirty ones. The Euro? Pure imagination! Yuan? Not convertible no rule of law in PRC. Same with Ruble. Yen? Going to 300 per dollar. Amirite?