Walking the Line and Failing the Test

Miles Franklin sponsored this article by Gary Christenson. The opinions are his and are not investment advice.

Breaking News for July 31, 2020:

• The NASDAQ composite closed at 10,745, near a record.
• The DOW closed at 26,428, about 3,000 below its February high.
• Gold closed at $1,962, up $65 for the week at a new closing record.
• Silver closed at $24.21, up $1.36 for the week to a seven-year high, but well below all-time highs.

“Walking the line.” What could that mean?

a) Behaving in an appropriate manner while exercising self-control.

b) Maintaining an intermediate position between contrasting choices.

c) Healthy, self-sustaining, responsible choices made in moderation.

“Walking the line” to make wise economic decisions.

1. Individual, business, and government revenues exceed expenditures while avoiding debt.
2. Evaluate and predict economic consequences BEFORE making important decisions.
3. Make wise expenditures that support self-sustaining businesses and programs.
4. Act in moderation to support healthy and productive decisions, rather than encouraging negative, unproductive, and dependent decisions.

HOW ARE WE DOING?

1. The U.S. national debt exceeds $26.5 trillion. On January 1, 2000, it was $5.7 trillion. Conclusion—The U.S. government has had irresponsible management for decades. Much misery is coming as the consequences unfold.
2. The pandemic shutdown has saved lives, according to the media. It has also created millions of unemployed workers, a tsunami of individual and business bankruptcies, and prevented millions of people from paying rent, mortgage payments, and credit card debts. Government revenues have plummeted, and pension plans are more insolvent than before the shutdown. Did the “powers-that-be” (PTB) consider the alternatives and consequences BEFORE they chose to “save lives at any cost?” Conclusion—Either the PTB wanted to crash the economy, or they weren’t thinking, or both.
3. Does spending $trillions on governmental programs make sense? Is it wise to pretend $26.5 trillion in national debt is unimportant? Are the $trillions spent on welfare and warfare creating self-sustaining revenues, or are those $ trillions flushed down the drain? Are governments and economies improved by massive debt, crony capitalism, and huge give-away programs? These programs eventually make the wealthy even wealthier and increase the cost of living for the poor and middle class. But a higher cost of living while millions are unemployed during an economic recession/depression will be a disaster. Conclusion—the PTB may benefit, but others will lose purchasing power, homes, credit and savings.
4. Are bailouts creating dependence for citizens, corporations, and local governments? At the end of July 2020, many people and businesses are dependent upon “printing” by The Fed and “helicopter money” checks from the government paid directly to citizens. However, the Fed can’t create wealth, prosperity, jobs, food, or energy. “Printing” fake money may partially replace revenues destroyed by the “shutdown,” but it does not create jobs or sustainable businesses.

From John Rubino:

“… there is no end in sight for the massive money printing around the world.”

“… the world is on the verge of spinning out of control.”

“The reason why so many groups are so angry right now is because the system no longer works for most people.”

Mt. Printmore

The Fed can print, but they are encouraging unhealthy decisions. 

IS ANYONE SURPRISED THAT AN UNSUSTAINABLE FINANCIAL SYSTEM IS CRASHING?

From Bill Holter: “All roads lead to gold.”

COVID-19 provided a convenient excuse to crash the economy. It happened during an election year. Attributed to FDR: “In politics nothing happens by accident. If it happens, you can bet it was planned that way.” Whether he said those words, they ring true about the “shutdown.”

WHAT CAN WE DO TO PROTECT SAVINGS AND RETIREMENTS?

1. Recognize that central banks and the banking cartel will create more fake money and devalue the dollar further.

1. Buy stocks that will skyrocket. Apple sold for $10 in 2009, it closed July at $425. What will be the next Apple success story? Oops, that is the problem.
2. Realize that the financial system depends upon increasing debt, higher prices for stocks, bonds, and consumer necessities. Protect investments. Oil sold for $17 in 2001, peaked at $147 in 2008, and is $40 now. Picking winners can be difficult.
3. Stick with real money that has survived several millennia – gold and silver. Silver sold for $4.01 in 2001 and closed July at $24.21. Gold sold for $260 in 2001 and closed July at $1,962, a monthly closing high.
4. If you had bought silver anytime after 1990, the minimum increase would have been 320%.
5. If you had bought gold anytime after 1990, the minimum increase would have been 350%.
6. Gold and silver have not bubbled into the stratosphere like Apple or Tesla stocks, but they have preserved purchasing power and appreciated. The people who lost 50—90% of their portfolio after the 2000 crash would be pleased if they had purchased silver under $5 in 1999 instead of most Internet stocks.
7. Those who lost in the real estate crash of 2007—08 would envy those who bought silver in 2005 at under $7.

Will Silver and Gold Rise Higher? Consider:

8. Every market corrects, even tech stocks. Silver and gold will correct, bottom, and then rise higher.

Jim Rickards: “I would put [gold] at $15,000 an ounce before 2025.”

• Will the Fed stop “printing” fake money? Will the Fed abandon QE4ever? Will the Fed apologize for actions that enrich the upper 1%? NO! Expect higher metals prices.

• Will congress become fiscally responsible and balance the budget? Are congresspersons refusing massive cash donations? Will you win the Powerball Lottery this week? NO! Buy silver.

• As the Fed and the banking cartel increase currency in circulation by borrowing Federal Reserve Notes (debts) into existence, they devalue existing dollars. Gold, silver, and stocks rise as dollars buy less. But stocks are high in 2020 and silver is not.

Yes, gold and silver will rise much higher. Expect gold at $3,000 to $20,000 depending upon how much fake money is printed. Expect silver at $50 to $500 depending on “printing.” What will a cup of coffee cost when silver costs $100 per ounce? Will gasoline sell for $10 or $30 per gallon? These high prices are the consequences of QE4ever, fiscally irresponsible government, and fractional reserve banking.

From Jim Rickards:

“Governments have shuttered America’s restaurants, ale houses, barber shops, nail salons, gymnasiums, arenas, beaches… and all places of public resort.

“Governments have ordered churches to scatter their flocks – and bolt their doors.

“Yet the same governments that barred you from your sister’s funeral, that locked you out of Sunday service… have blessed the mightiest mass gatherings we have ever encountered.

“We refer of course to the George Floyd protests.” [Why?]

Gross Domestic Product is NOT a perfect measure of economic activity, but is widely used. Does this chart suggest “money printing” by the Fed will increase?

The NASDAQ composite is near all-time highs. Do you believe it is a good representation of the overall economy, or is the GDP graph a better measure? We’ll know in a few months.

WALK THE LINE TOWARD RESPONSIBLE ECONOMIC DECISIONS.

1. The Fed and other central banks may not return to a gold backed monetary system in the foreseeable future, but individuals can. Buy gold.
2. Silver is undervalued compared to debt, M2, the Dow, the NASDAQ, gold, and congressional irresponsibility. Buy silver.
3. The NASDAQ may make new highs but remember the crash in 2000. Following the peak, the NASDAQ 100 fell over 80%. It is a bubble as big as 2000 and could happen again.
4. Apple stock rose to $425 on July 31. Everyone loves Apple, but is it worth that bubblicious price? In my opinion, silver is over-bought and due to correct, but it looks like a far better choice than Apple for the next year.

1. Evaluate Risk and reward choices. Is a bet on larger debt, continued spending, economic stupidity, and crony politics a solid bet? Yes, of course. In that case, insurance policies in the form of silver and gold bullion are solid bets.

Miles Franklin sells gold and silver. They don’t print fake money, promote over-valued NASDAQ stocks, or pretend to influence congress. Call them at 1-800-822-8080 to protect your assets from the denizens of Mt. Printmore and other central bankers.

Gary Christenson