200430 Way ahead

No charts or quips today. IF there was ever a time to be glad you are not a Mayor or a Governor of a US city or State- today is the day. Imagine for a moment we are just that. Since our Egos are large- lets be Governors. Choose your State!

First, we fellow Govs are facing a healthcare crisis of rather epic proportion. We have some decision making authority- but we all know that our Constituents have no savings. So, while closing everything makes sense- the fact is that our citizens cannot afford that. They have rent, car, tax, grocery, healthcare, cell phone, cable, gas, electric and a myriad of other bills to pay. As Governors, we cannot afford that either- since we never planned on paying unemployment benefits to 20% of our population in 2020.

Remember so very long ago (3 months) when the economy was rolling, tax receipts were excellent and it was the best economy, ever! Today, we know that the US Federal Government has no plan to help & wants to pin all the blame on our rosy expectations for tax receipts on us. Well, wasn’t our models for tax receipt based on USG projection? How/ when did we become the stupid ones? To pay what we owe- we now need to fire our State Police, teachers and other first responders. Oh, bills versus public safety- that’s not a choice anyone should have to make!

What to do? The absolute truth is we all want to keep each and every one of our Registered Voters and their kids safe and sound. Not just for the cynical reason that they are Registered Voters. But, that’s a part of the equation. Keeping the State economy shut down is (for lack of USG support) becoming untenable. The State has interest on Bonds to pay. Salarys to pay. And, landlords & mortgage companies have to get paid. Landlords must get paid simply so they can pay the banks that hold the liens on the property.

If you are a renter, be thankful! You can walk away from this mess and buy an RV or a tiny home!

There is no person more delusional (IMO) than a person with a mortgage who calls him/ herself a “homeowner”. A homeowner with a mortgage owns absolutely nothing. Zilch. They own a dream. The bank owns the home. They are nothing but a glorified renter with far more net worth… skin-in-the-game …than a renter. No one can wave a wand and wish away the pandemic. And more to the point of the post- no one can wave away the feeding of the credit (Ie, Loan / debit machine) that underpins modern monetary constructs.

The machine will hunt down and evict / foreclose on those that cannot pay the bills. Far too many “Homeowners” are about to find themselves homeless than I am willing to admit to myself. What is coming for them is awful. It is not safe to be a State or municipality, either. Bankrupcy is hunting you- relentlessly. Particularly in the Red States where the majority of taxes that fund those governments are from Property and not Sales tax. Yes, I know publicly many Republican State leaders are laughing at the fix that New York and NJ are in- but if we could waterboard them, they would admit the truth that they know the axe is about to fall on them.

Since we now know, as Governors, that the Federal Government is going to 1) Not help in the COVID fight and 2) let our States go bankrupt- we need income & Sales taxes! We are clearly all alone in the fight… so all of us Govs MUST now concede and send people back to work- many in unsafe conditions. We can pin hope on scientists and pharmaceutical companies that they will develop a miracle cure soon. Hope. It was beaten into me in Ranger School that hope is never a planning factor. That said- I hope they pull it off.

Ok- down to basic “Squad Level Tactics.” What should you do to protect you and yours?

  1. If forced back to work- demand safety.
  2. Make hard choices. Sell stuff. Get out of debt. For the love of God- do it- now! If you do nothing else! Get out of debt and do NOT invest in debt instruments, or REITs, real estate or crazy high PE companies like Tesla. Debit is a trap that is about to shut. If you own Real Estate, seriously consider deleveraging!
  3. Start a garden. Raise veggies. Its not just a huge $$ saver- its fun for you and the kids!
  4. Observe Denial. You will see it in friends and family who believe this Pandemic is not a game changer. They will truly and honestly believe their idea of “normal” will return. Bet on it, not returning. Not due to COVID directly. It won’t return because the credit markets are going to collapse under the weight of bad loans and nothing in the future will resemble the old normal.
  5. Do not fall into old bad habits. Save every penny. IF the only thing you learned by sitting at home for a month was that 20% of your spending was wasteful- you have learned a life lesson that you shouldn’t soon forget!
  6. Get a tiny bit of Bitcoin and maybe some Alt Coin ( ETH, LINK). Whatever suits your budget, your risk tolerance. There are a lot of downsides to Crypto- but at least most of them are free of inflation risk. The US Govt is printing money right now like crazy men. Simple law- supply and demand. The US Dollar is becoming, every day, more worthless. Soon STUFF will be currency.
  7. Sell dumb stuff you own to people that still think that times are soon returning to normal. All the crap you got lying around. NOT stuff you might really need. Just the ancillary things. Your heart will tell you what is needed and what is expendable
  8. Buy some silver coins. Silver is insanely cheap right now. Go to a local coin dealer and do not believe the fraudsters on TV. There are some legit internet dealers but a local guy is a resource to cultivate. At about $15.50 an OZ, you should be able to get some silver dollars at about $21 per coin.
  9. Demand on silver coins is high & it is pushing the premium (Delta between Physical silver and retail coin price higher- go with god! Remember that modern silver US dollars are 99% silver. The older stuff before the 1970s was ~75% silver. Thats because they actually were in circulation and needed to be harder. I am NOT a coin guy- so before you go off half cocked- do your own Due Dill.
  10. When Jewelry stores open in your area- buy 18K gold chain and high quality silver chain. If they are strapped for cash, the premium mentioned in #9 will be much less.
  11. ANTICIPATE an October resurgence of COVID. It will be the stake in the heart of the credit market. The 2008 crash began in March. We limped along until September. Most folks remember Sept 08. They ignored March 08. That was the warning shot. Do you remember March/ April 2020? What more of a warning shot across your bow do you need, dumbass!
  12. Every action you take, every penny you spend should be done with forethought. What is best for you? Your family? Plan, plan, plan.
  13. POST LOCKDOWN PARTY: Let all your friends and family get as stupid as they want in the coming weeks. We are either approaching Half Time or the First Period Break.
  14. Pandemics generally resemble NFL Football (2 halves w/ a halftime) or, like the Black Death… Hockey That is 3 ‘game on’ periods and two breaks. We are either at Half Time, or end of the 1st Period.
  15. If there was ever a time TO GET STUPID (forgive the Caps) this is not it! Let others do stupid. This is the time to find stuff on the shelves ( Flour, yeast, TP) that were in short supply, and may be again. Did you learn that there are times in life where stuff, and not cash, was king??
  16. Time to buy a freezer and fill it with protein. The more people party- the more opportunity exists for you to plot and plan your way ahead! When the party is over they will swap really, really, good stuff for a pound of hamburger. Read stories of the Great Depression. Men sold cars worth $1000 for a weeks worth of meat and potatoes to feed their families. A thousand back then is over 100K now. The citizens of the US have 80 years of proof they can waste anything and everything without consequence. That “proof” is about to be proven false.
  17. Buy Mason Jars and food storage systems. Buy as many as you can afford. More than you need. It will be the TP of 2021. Mason Jars are cheap now. They will be gold as families across the nation take all they have learned from the last 6 weeks of social distancing and decide to declare their own food storage independence. For 2 generations, food storage was a power held by grocery stores. Their is a shift in that cycle of dependency coming. In fact, there is no reason why anyone with access to a 10th of an acre of land ever had to be or ever should be dependent on a grocery store. See #3. See YouTube. You can do this! It will taste better and be far more fun!

Don’t waste halftime by going to the beer stand like a fan. You are not some old fat fan! You are a Player! This is your life. You pretended pre-COVID you were a fan of some game. In Post COVID world, you are either a Player or a Victim. There are no ‘fans’ of COVID-19. Take that from a guy who lost some dear friends in the past month.

Use this coming half time to make adjustments against the opponent you face. Be your own Governor. Or, choose to lose. Your choice. Either way, my best to you!

200428 Commodity Price Spike

These are unusual times. Generally in a late cycle Bull Market commodity prices spike. But, for two generations, investors have been attuned to watching the prices of Natural Gas and Oil. Demand for those has collapsed.

What we are potentially about to see is a massive rally in Gold and Silver. The Governments of the world are busy dumping paper money into the system to attempt to prop up the Old School system. Well, not really OS. They are defending Modern Monetary Policy. OLD SCHOOL is precious metals- and there is a chance that real money will finally have its day as the paper hangers watch their currencies collapse.

200414 May you live in interesting times

Market Bulls are correct! They are! There has been in the past no time when the overall stock market has bounced 50% from a low and later reversed lower. It hasn’t happened in the past. So, the TV pundits are now pushing stocks, loudly. That is their job. I think they are nothing but shills for virtually worthless Fiat investments. They may be right, in the short term. I suspect they are wrong in both the short, intermediate and long term.

COVID-19 is a game changer. Stay at Home orders (SAHO) implemented on a virtual Planet wide basis has destroyed industries. Its changed lives. There may be a tremendous relief rally in a few weeks as SAHO’s get lifted and people become irrationally exuberant about returning to their pre- COVID lives.

I applaud anyone that can make money in an uptrend- as long as they put at least part of their profits into physical gold and silver. There is no cure for COVID-19 at this time. No cure or vaccine coming soon- regardless of what politicians or “cheerleaders” say. China is once again locking down entire regions due to new outbreaks. As I’ve said before- I will say again- this isn’t over!

The battle for COVID-19 isn’t over. This isn’t the beginning of the end. It just the end of the beginning. The pundits are saying that only 2nd quarter earnings are going to be awful…. they promote the idea that sometime in the summer normalcy will return. They have no basis for the prediction since a situation like this has never happened when so many Average Joe’s have had exposure to the stock & debt markets.

What does “normal” look like? Right now, in the States, millions of husbands and wives are looking at all their expenses with suspicion. Three weeks locked up at home, with limited income and they are wondering about why they wasted so much money in the past. Starbucks? Really?

The longer the lock-down lasts- the more they realize how much wasteful spending was in their budgets. The US Consumer has long been hailed as the 70% driver of the economy. Now, that consumer, isn’t. That consumer is learning that he/ she has under- saved for emergencies and over- consumed on dumb stuff. The longer this lasts, the more self realization will occur. Why pay $6 for a coffee one can make at home for 25 cents?

The game has changed. But most (the dumbest people really) won’t accept that at first. First will be a post lock- down splurge. That will happen globally. Happened after the first year of the Bubonic Plague in Europe. Then, COVID returns and panic returns. People are going to get busy congregating and it will propagate the problem.

What to do:

  1. Self isolate yourselves and your family long after this seems “over”. It only make sense. Polite excuses might save the life of your or your loved one.
  2. If you have savings, buy some Silver and Bitcoin. Don’t drain your accounts- but it is prudent based on wildly out of control money printing by governments- the USG in particular. The debt markets are at a virtual crisis point.
  3. Take advantage of the “Splurge” time to restock your shelves. Clearly basic goods are far more valuable than cash. For the kids down the block that were selling rolls of TP at $5 each- kuddos!
  4. If you have a sewing machine, make masks! Not that you need them… but you can sell them on a street corner to those to dumb or lazy to make their own. $1 in material can net you a 600 to 1000% profit. Too amazing an opportunity to ignore! The modern Lemonade Stand!
  5. Look at all the positions you held in your 401, 403, IRAs and other investment accounts with a clear eye. Is this rally a chance to cut losses?
  6. For all the positions you keep- set Stop Losses on them. Take the emotion out of the equation.

I could very well be wrong. Maybe its all sunshine and roses from here on out. If so, I will never be happier to be wrong! But keep your bright, optimistic eyes focused. My projection of S&P 1750 may be right. Hope not! Keep your options on the table. Embrace your inner Entrepreneur. This disease is a tragedy for so many 10s of thousands of families. Don’t add your name to that list. Move forward proactively!

200407 Only chart that matters

Todays rally was largely accredited to the suggestion by the US President that there was a “A light at the end of the tunnel” due to encouraging news from NY State. That disregards the fact that hot spots during a pandemic shift. While we all hope and pray for NY, the fact is that seven States have not attempted a pandemic response and several others are playing lip service. So, lacking national leadership, the “Light” that the President sees is probably an inbound train.

COVID-19 is a terrible disease that has forced the world to hunker down in a way that undermines all economic activity and is creating a credit crisis that is an existential threat to the world economy. The rally today is to be ignored for now- the Fundamentals of the economy are so bad (https://www.marketwatch.com/story/investors-should-prepare-for-a-coronavirus-induced-vicious-spiral-more-than-twice-as-bad-as-the-financial-crisis-says-jp-morgan-2020-04-06?mod=home-page ) that hope is not an investment option. We’ve seen a strong technical bounce! But without further elaboration I believe any reader can imagine the underlying Fundamental problem of a virtual total shut down of 70% of the economy.

That said- lets look at the chart.

200401 Silver & Gold Update

I’ve been intentionally avoiding updating this page because I am a Gold and Silver bull. Clearly for the last 8 years, that has been an unpopular space to own & didn’t want current panic/ emotion of my readers to get over-blown by action based on that bullish sentiment. In the short term, Gold, and especially Silver has been moving as if they were stock investments. I.E., mostly down! I don’t consider them that. I consider them the essential survivalists flight to safety asset.

That said, I am not going to pump them up right now. I have got more silver whenever it hits anywhere below $13/ oz. I buy. Told you that before. Below $13, it costs more to pull from the ground than it is to own! That condition is unsustainable. A Silver shortage is pending. The current Gold/Silver ratio is 114! That’s insane! Back when Jesus walked the earth, it was about 1:15. For most of the 20th Century is was less than 1:50. Silver has far more value now than when Jesus or JFK were walking about! It has investor AND industrial value. HUGE industrial value! If you own silver- don’t lose faith! If you want to own silver- get some!

Buying 18K gold chain makes as much sense or more than 24k coins. Probably more. The US Govt can confiscate coinage, but not jewelry. And, if you’ve read Fernando Aguirres book, “Surviving the economic collapse” based on his experience when Argentina fell into chaos in 2001, you will appreciate the value of chain over coinage.

Keep the faith! President Trump recently said that more bailouts are on the way. To the tune of 2+ Trillion dollars. The US Congress is out of session for the next three weeks. I suspect both the Administration and the Congress underestimate the clamor / outrage / messy situation that closing the vast majority of US businesses is creating for the average Joe and Josephine. Most Americans don’t have savings. Actually, at this point the average $400 savings account is gone. AND its going to take the IRS weeks (since they are on Stay At Home orders) to figure out how to get that $1000+ check to folks.

There will be a second direct payment to taxpayers in the US this spring. They will have to do that. An easy +$1T. The US will in-debt itself even more. The future path of US Debt pre- COVID was manageable in the ten year short term. Now the National credit card is being maxed out & the US debt is skyrocketing. Isn’t ironic that the Republican Party (said conservatives) are always the guys that over- spend?!

We cannot change politicians. We can only position ourselves! So, don’t despair if you are upside down in Gold or Silver. The day of reckoning for US dollar denominated assets has moved (by my estimation) from 2030 to 2022. Or sooner. Buy what you can, when you can. Silver is better than gold at this moment in history.