20200726 GSB LINK

My thesis from my last post remain unchanged. The best way to protect yourself from the coming economic storm remains Gold, Silver, Bitcoin and Chainlink (LINK).

I’ve not posted to this site in months. I’ve engaged in significant self reflection on the posts I’ve made and the opinions I’ve shared with friends and family that there was no way that the broad stock market would have a “V” shaped recovery. It did. I was undeniably wrong! What went wrong? Why was I so jacked up?

Made the third classic blundere. The first two blunders can be found here: https://www.youtube.com/watch?v=7LUUk6wVNrY

The third blunder is “Do not fight the Fed!” I think the validity of that rule will soon be suspect- but for now, it holds true.

There is a reason for the “V” shaped movement of the stock market- its false. It is based in digital dollars created out of thin air and the proclamations of the US President and the Fed Chief to do what ever it takes to prop up the stock and bond markets. The right side of the “V” that began in April is of almost the exact angle as the growth of both the US Debt and the Fed balance sheet combined. So yes! The market has scorched higher. Not due to economic activity by due to artificial and temporary intervention.

There are NO underlying fundamentals pushing the market higher- the only thing driving this nonsensical rally is the idea that somehow the US Government and the Federal Reserve have become the ‘Greater Fools.’ Why not push Tesla $1000 higher than what Elon Musk said in Feb 2020 was ‘fair value’? Why not? If the USG is going to flood the field with cash and seemingly remove risk! Tesla is not a financially viable company! But, since early April, its been a fantastic stock to own. The disconnect between reality and what has really happened dollar wise to many equity assets will soon stop diverging.

The US economy is in contraction. COVID 19 in the US has been incompetently managed. Perhaps that is too generous. The fact is that COVID was never managed as a National Response. Scientists were ignored and the entire disease somehow managed to become politicized by the Idiocracy that is modern US body politic. All the while, the Government is printing money like drunken fools. The underlying assumption is that the USG will somehow manage to get this right and the economy will resume as it usually does after recessions. That is an IF that I cannot abide.

I anticipated that between 2027-2030 there would be a shift from dollar dominance of world trade to a new global reserve currency. I suspect that shift will be much sooner- if not already starting. Why on Gods Green Earth would any nation trust the US to manage the Reserve Currency, when the vast majority of the Citizenry and the institutions of the Federal Government have quite clearly gone mental?

The polarized incompetency of the US ruling class has created the conditions for Nations that are not totally financially incompetent or as looney as the U.S.A. to seek a new form of reserve currency that is divorced from the USD and all the baggage of Washington DC. Most Americans do not understand (and will not until its lost) the significant global advantage it has enjoyed as the Reserve Currency since the end of WWII. Losing that status will impoverish most.

Not sure what that new Reserve Currency will be. I suppose nobody is. I suspect that a legitimate Free Market will decide that issue. So to hedge the bet- a little bit of old and a little bit of new… Gold, Silver, Bitcoin and Link are the best bets moving forward. The Fed and insane amounts of stimulus can only go so far- and those opiods will lose potency sooner than later. This fall is going to be ugly. Bears make money, bulls make money and pigs get slaughtered. This fall, its doomsday for the pigs. If you were smart enough to run this artificial “V” up to these levels… don’t be a pig. Take some of that and GSB-LINK that cash to an asset class that might survive the pending Reckoning.

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!

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.

200326 Dead Cat Bounce

The last few days have triggered a significant upside rally that in some years would actually be considered a great annual return (+13%). Do not get suckered into it unless you are buying stocks you are willing to hold long term. The initial drop of over 25% in just a few weeks time is indicating that another drop up to that amount may occur in the ST future. The market has rallied on the news that the US is willing to run the national credit card to max levels. That isn’t something to rally on. It’s modern monetary theory.

Short term, it may offer some relief. Don’t think for a second that this is the last of the ballout bills. Its just the first big one of several. The party will end next week when the news that COVID and the economy remain on grim a trajectory.

Last fall I wrote that the trajectory of the failure of the US dollar had at least 10 years to unfold. That was based on the math of $1T USD in deficit spending per year for 10 years. $10T total. The US Government now appears (with published FED monitization of debt) to be on track to print $7 trillion out of thin air this year. The clear investment winners will emerge later this summer- Gold, Silver and Bitcoin.

Want a great read on what happens when a currency collapses and how it can impact you and your families health, welfare and safety? I recommend this https://www.amazon.com/gp/product/9870563457/ref=ppx_yo_dt_b_asin_image_o00_s00?ie=UTF8&psc=1

Do NOT judge this book by its cover! I was very surprised and impressed with the content. Well worth the time and money. Many might find it invaluable. This site isn’t linked to Amazon Marketplace. I’m not making a penny on the advice it holds.

Sneak Peak: I’ve bought some silver and gold coins over the years. It seemed prudent. What this author describes when he was faced with hyper inflation was that a 18K gold chain was better. When he needed to buy something, he would sell gold links. Owners of gold coins quickly became targeted as “rich” by the desperate. Besides, gold chain is cheaper than trying to buy a coin. Win- win. I had never heard that before I read this book. Probably I wasn’t paying enough attention.

20200229 Fearing Fear itself

My thesis is that COVID-19 is an awful flu that is feared more for its unknown impact to the economy and everyday life than the actual disease impact itself. My approach to investing in this chaotic period is towards the bottom of post.

Markets hate uncertainty, and there is no historical model available to attempt to model the potential impact of this form of Coronavirus. Latest data suggests that container ships arriving in China was down 30% compared to same month last year. China is the worlds builder of “stuff”, and the US its best customer. The movement of that ‘stuff’ is clearly dwindling rapidly- which portends a significant global slowdown.

Lets look at rough numbers:

MarketChange from latest high:Why?
Dow Jones Industrial Average-13.80%Fear of unknown
Nasdaq Composite-12.50%Fear of unknown
Asia DOW Index-10%Fear of unknown
Nasdaq Europe-12.80%Fear of unknown
Gold-5.30%I don’t know
Silver-12.20%Fear of industrial demand drop
Bitcoin-19%Declines started before COVID Panic hit full force. Unknown why it hasn’t reversed. Seems to be a “sell anything with a Ask/Bid mentality”

In theory, as the global markets turned south, Precious Metals and ‘Digital Gold’ should have appreciated in value. What we are seeing in all markets currently is a flight to liquid fiat. Concurrently, markets are expecting a Central Bank global intervention reducing interest rates. The world is already awash in paper money and its derivatives! No form of currency has ever cured a disease! This is a nonsensical, “lets do something to look like we are doing something” self distructive trap.

As indicated in Para 2, the world might be facing a Supply Shock of goods. Last one I remember was the 1973 Oil Embargo, the 1979 Oil Crisis and then the impacts of the Hunt Brothers trying to corner the Silver market in the late 1970s. Supply shock brings panic and reckless behaviors out in the most rationale of people. A supply shock in tandem with a flood of paper money is a recipe for an inflationary spiral. If inflation gets out of hand, most of the governments of the world to include the US will face an existential crisis. A huge portion of the US debt is in short term notes, so inflation will significantly alter its ‘refinancing rates’. A spike in inflation may become an existential crisis to fiat currencies on a global basis.

My ST investment Equity Market Strategy is to maintain my SQQQ and TECS (inverse ETF) positions. The market should bounce up before falling further and setting a bottom. This is not a time to be hoping for a “V” shaped bottom. It won’t happen. If you are not currently Inverse, its prudent to wait for a move up before betting on further drops. Assume that this weekend that all the global financiers and bankers are trying to plan a market intervention intent on pushing indexes up in order to soothe fears. I expect a move higher in equities starting Monday. Due to the never ending stream of bad news / COVID-19 Panic, that may not work.

My ST Precious Metals Strategy: (not physical here- market related assets like SLV, GLD, PAAS, JNUG, NUGT). I was stopped out of all of my PM positions in last 2 trading days. Gold: Anticipate continued weakness. Silver: Expect heavy short selling. Remember that in 2008, $SILVER futures were pushed down to $8. If silver gets anywhere near that level, I am backing up the truck & going all in.

Crypto: Wait and see from the sidelines. Will do a BTC, ETH and LINK update this weekend. Crypto is a hopeful asset, in that these assets are not fully established as legit and for the average Joe to put hard earned money in this seems a gamble. Since average Joe is getting more fearful by the day- lets assume that new money will be unlikely to enter this space in the short term and what we will be seeing is mostly current participants trading in and out of fiat in a zero sum game against each other.