David’s Commentary:
For the last 35 years hardly a day has gone by that I didn’t spent time reading about the economy, precious metals, the dollar and much more. I learned to process the information through a “doom and gloom” filter. Fortunately, although there have been some bumps along the road (stock market crash in 1987, dot com crash in 2001 and the stock market crash in 2008), things have worked out much better than I thought they would. And that’s a good thing. All that silver I purchased at $6 and all that gold I purchased at $300 as “insurance” look just fine today – even though I never had to “cash in.” The stock market and the global economy are doing just fine – we are told.
The “kick the can down the road” policies are still working. We have yet to hit the wall, that is surly out there. I am amazed that the mountains of debtand deficits we’ve created haven’t taken their toll yet.
Where is the inflation that should have accompanied all the money and debt creation since I got into the precious metals business 35 years ago?
Oh, it’s there all right. All you have to do is look for it and you’ll find it. It’s easy to spot in luxury goods like expensive cars and watches and at fancy restaurants and sporting events. Speaking of which – my son Andy and Bill Holter attended the World Series opener in Boston last night. They had poor-boy seats in the left field bleachers and they paid $1,600 a ticket. Susan and I went to a Timberwolves (NBA) game on Monday and the seats cost $350 each. There was a family of four sitting directly in front of us and the were all eating burgers and fries and soft drinks and I couldn’t help wonder how can a family of four afford an evening out to a ball game like this that must have cost them over $1,500?
Since most of the new wealth has gone to the top third of the population, the things they purchase will show the largest increases. They have the cash to pay for it. The bulk of the new money has gone into financial assets, which is the playground of the well-to-do. The rich get richer and the rest struggle.
But what goes up must come down. The only question is when?
The one thing that is constant is my undying belief in gold and silver in spite of the price performance of the last six years. I constantly remind myselfthat I didn’t buy my precious metals to make a profit. It was my financial insurance, the base of my asset pyramid. The gold and silver was always there, just in case. Now I did sell up to half of my gold and some of my silver on the way down from the peak a few years ago, but I never touched my “core” position. Recently I started to build up my gold and silver reserves again. I purchased four mint boxes of Silver Eagles and 50 Gold Buffalos. My doom and gloom outlook is flashing a big red warning sign. It’s telling me that this time could be “the big one.” I felt the same way in 2007. We came close to a total collapse, but the Fed came to the rescue with a massive dose of money and credit and saved the banks and the economy – for a while. But the Fed is withdrawing liquidity from the market (they are selling tens of billions of dollars worth of bonds from their portfolio which soaks up liquidity). They are raising interest rates and we are getting dangerously close to a repeat of 2007. But this time it will be worse.
My views are very “Twentieth Century.” I am taking the liberty to include the first decade of the Twenty First Century in that statement. That’s one of the nice things about writing my own newsletter. I get to “take liberties.” I have never abandoned my Twentieth Century views on gold, silver, inflation, debt and money creation. I don’t care what the price of gold is or where the Dow is, as the longest bull market in stocks on record comes to an end, my Twentieth Century views will serve me well.
Yes, I am stuck in the Twentieth Century down to my world-class collection of WWII firearms and aviation art, my audio system that is based on a reel to reel tapes, tube amplifiers, LPs, CDs and my “antiquated” belief in gold and silver.
On that note, I love the following article by Simon Black goes back a bit further and Looks at how well gold has retained its value from 1,000 years ago.
Simon Black
Look at how well gold has retained its value from 1,000 years ago
On October 12, 929, roughly 1100 years ago, Abd-ar Rahman III of the Umayyad Dynasty was proclaimed ruler of Cordoba– the Islamic kingdom that comprised most of Spain at the time.
Rahman was just 21 when he ascended to power, and he remained there for nearly 50 years as one of the wealthiest and most powerful monarchs in Europe.
Historians Denis Cardonne and Edward Gibbon calculate his annual tax revenue at approximately 12 million gold dinars… which was a LOT.
READ MORE HEREDavid’s Commentary:
We are facing the worst of both worlds. Expect falling asset inflation (housing and the stock market) and rising cost inflation (rising oil and tariff-induced price increases).
Here is another “It’s So Like The Twentieth Century” article. That’s a century when gold was cool.
John Rubino
The sentiment shift is still subtle, but it’s both real and widespread…
The sentiment shift is still subtle, but it’s both real and widespread. After a few years of being ignored and/or dismissed as basically useless, gold is cool again, attracting positive comments in the media and increasing accumulation by big investors.
India, for instance, imported less gold than usual in the first part of this year but lately has
ramped up its buying, with August imports more than double the year-earlier amount.
READ MORE HEREDavid’s Commentary:
According to John Williams (Shadowstats), There are two forces bearing down on the economy. Oil price-driven inflation and Federal Reserve rate hikes.
Faltering Consumer Liquidity Clobbered September 2018 Retail Sales and New Residential Construction.
Most of our GDP is based on debt. Spending is slowing because so many consumers (retail is 68.5% of GDP) are already strapped with too much debt. This is a bad time to get smacked with the double whammy of rising oil and rising interest rates. Those are forces that can topple the economy.
Ted Bauman
U.S. GDP Is Riddled With Debt
That’s setting us up for a big, unwelcome surprise.
Dalio’s point is one I make often. If you only pay attention to averages, you’ll miss the most important things about the economy.
And it’s likely to cost you a lot of money.
Every day we’re bombarded with statistics. Gross domestic product (GDP). Unemployment. Inflation.
READ MORE HEREDavid’s Commentary:
In a conference call with Jim Sinclair and Bill Holter it was impossible to miss the enthusiasm they both had for gold in 2019. Jim says the coming bullmarket in gold will surpass anything we have yet seen. $3,000 to $5,000 gold is baked in the cake. How could one not be excited? The forces that propel a gold bull market are knocking at the door – rising inflation, rising interest rates (which will slow the economy and derail the stock market) and the loss of the Petro Dollar standard, which will punish the dollar. The Black Swans are circling.
This article focuses on one of my favorite topics, the Petro Dollar. If Saudi Arabia abandons the dollar and starts trading oil in Yuan prepare yourself for a falling dollar (due to reduced DEMAND) and rising prices. This is a very favorable environment for gold.
Zero Hedge
China Will ‘Compel’ Saudi Arabia To Trade Oil In Yuan — And That’s Going To Affect The US Dollar
October 11, 2017
China will “compel” Saudi Arabia to trade oil in yuan and, when this happens, the rest of the oil market will follow suit and abandon the U.S. dollar as the world’s reserve currency, a leading economist told CNBC on Monday.
Carl Weinberg, chief economist and managing director at High Frequency Economics, said Beijing stands to become the most dominant global player in oil demand since China usurped the U.S. as the “biggest oil importer on the planet.”
READ MORE HEREDavid’s Commentary:
This is why you need to hit a grand slam home run with gold and silver. It’s one of the sure ways to build up your nest egg to be able to deal with theballooning cost of living we all face.
Lance Roberts
F.I.R.E.’d Up – A Million Ain’t What It Used To Be
“You need at least $5 million, or $6 million. … Really, you might need $10 million,” she said — short of that, it’s just not going to be enough for most people.
“You can do it if you want to. I personally think it is the biggest mistake, financially speaking, you will ever, ever make in your lifetime. I think it’s just ridiculous. You will get burned if you play with FIRE.”
READ MORE HERE
Proven Probable
