We Really Do Live in a Concrete Jungle

April 28, 2020

The Miles Franklin Newsletter

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From The Desk Of David Schectman

David's Commentary (In Blue)

More and more it appears that we will be forced to abandon the dollar and use the new digital currency that will replace it. I am not going to discuss the pros and cons of this, mainly because there are NO pros. You will lose all of your financial privacy and will be taxed on every transaction. If the government decides that negative interest rates are in order, they can, at the click of the keyboard, snatch the money directly from your bank account. This may be the most important reason to own gold and silver.

I always maintained that a key benefit to owning gold and silver was PRIVACY. Once we enter the digital currency world, that benefit will be more important than ever. It appears that the day of reckoning for the paper dollar is not far off. You can always barter or trade gold and silver outside the system. So, think about that in addition to the “preservation of your wealth” aspect of owning precious metals.

Six weeks ago, when the Pandemic started to affect our life style and the economy, I wrote, “The world will never be the same again.” I got my fair share of criticism for making such an outlandish statement. Have I changed my view now? No, it was clear then and it is even more clear now.

The Coronavirus can best be described as The Great Leveler. My best friend Rick is a man who always tells it like it is and is never concerned with being politically correct, and he never pulls any punches. He describes Covid-19 like this: “ C19 is an accelerant for weakness in humans and businesses that needed to be eradicated. The weaknesses were always present.”

I have had an abundance of time, due to the shutdown of businesses (We at Miles Franklin are fully functioning) and a home quarantine, to check out different viewpoints on the virus and what it portends for the economy. My conclusions are as follows: There are different interpretations on what the virus means to our health and what lies in store for the dollar and the economy. But that’s nothing new. There are always more than two sides to every story. Those of us who can figure out which is the correct interpretation will fare much better than those who can’t.

I usually live in “the gray” and things are rarely black or white for me. But occasionally, things are so crystal clear that it is easy to take a firm stand, with confidence and certainty. I would like to present my viewpoint, one that I believe is the way this will play out, unless proven otherwise. I present these views with confidence and certainty.

Covid-19 it is something that is here now, and will be here in the future and we will have to learn to live with it and adapt. It is very infectious and very deadly to older people with pre-existing conditions (obesity, diabetes, heart and respiratory conditions, etc.,) but probably no more of a threat to younger, healthy individuals than a severe flu season. The key word here is “adapt.” If that means avoiding crowds and wearing a mask in public, then that will be the new “normal.” Maybe we will have to care for our elderly parents at home instead of shipping them off to a nursing home because it is more convenient. It used to be that way a generation ago. Two of my doctor friends tell me that the Covid-19 is mutating. I have read the same thing on Zero Hedge. Not all mutations (and viruses do mutate) are bad, but it makes finding a vaccine much more difficult. If you view the Coronavirus as a “flu” then think about the effectiveness of a flu vaccine. Best case, in any given year, it is only 60% effective and some years it is only 10% effective. And probably less than half the population will even bother to take it. To expect more from a Coronavirus vaccine is wishful thinking. So, accept the reality that it will be with us every year, just like the flu, and we will learn to live with it. I am taking all the reasonable precautions. I am 78 and in the “at risk” age group. My 20-year-old grandchildren need not take the same precautions that Susan and I do, unless they choose to. I don’t mind wearing a mask when at the grocery store or Target or Best Buy, and I don’t mind avoiding restaurants and sporting events. (Well, actually I do, but I can live with it) I don’t mind frequently washing my hands. But if that is the extent of the “new normal” I can deal with it. Everyone will have to learn to adapt.

In the midst of all the confusion, there is one site that I follow closely and it does seem to offer a fact-based perspective on the virus. Below, I have linked a Peak Prosperity video and I suggest that you should absolutely check it out. As is always the case, it is up to you to decide what is really occurring.

The Covid-19 virus “acts like no pathogen humanity has ever seen”

Yes, it attacks the lungs most; but it also can do severe damage to the heart, blood vessels, kidneys, gut, skin and brain.

Cardiologist Harlan Krumholz of Yale University says it “can attack almost anything in the body with devastating consequences. It’s ferocity is breathtaking and humbling”.

We also now know it has two pathways for infection, the ACE2 receptor (which is found in organs throughout the body) and the CD147 receptor on T-cells (found in the immune system).

The more we learn about covid-19, the more we realize what a formidable foe it is. This knowledge will eventually tell us how to contain and then beat it — but in the near term, it should keep us wary that the virus still likely has more surprises in store for us.

https://www.peakprosperity.com/coronavirus-doctors-stunned-by-damage-seen-inside-the-body/

If you fall in line with Chris Martinsen’s thinking, then it will be a long time before the economy gets back on track and all of the business hardships and economic contraction is in the early stages and will get a lot worse and last for a long, long time.

The real issue is how the Pandemic has affected the economy. Let me circle back to my statement that Covid-19 is the “Great Leveler” or as my friend Rick says, “ an accelerant for weakness in humans and businesses that needed to be eradicated. The weaknesses were always present.” Step back for a moment and think about WHO is being hurt by the government mandated shutdown? For the most part, It’s any business that is undercapitalized, in debt or without a sound business plan. That describes the vast majority of small mom and pop businesses. Most businesses who do not have debt, have a strong business plan and the ability to adapt will survive. The same is true for individuals. Since 80% of the population cannot survive for 30 days without a paycheck, then they are as vulnerable to a financial calamity as the 85-year-old obese diabetic with a heart condition is to the virus. In both examples, they were vulnerable because they made questionable CHOICES.

We really do live in a concrete jungle. It is as much survival of the fittest in Newport Beach as it is in the Congo. It’s nature’s way – that is if you believe in Charles Darwin. The strong survive and the weak are culled out.

I have empathy for people who fall onto hard times that are not due to bad choices. People get sick. People get laid off. Shit happens. But most people now find themselves in harm’s way because of their own deliberate poor CHOICES. People leased an expensive car that they could not afford so they could impress their friends and neighbors. (My father always paid CASH for his cars, and would drive them for 10 years or more – typical of his generation, one coming out of the Great Depression where debt was avoided at all cost.) Many people bought a house that they could not afford, but as long as they could (barely) make the monthly mortgage payments, they were o.k. The same for their cars. Most people lease their cars, and don’t pay cash for them. Some people even take out 6-year or 8-year leases so they can drive a car above their means and afford the monthly lease payment, and then after 3 or 4 years, they trade the leased car in while still owing money on the existing lease and they roll over the lease balance into a new 6-year lease. The car dealers love that. It’s insanity. It’s a perfect example of a bad choice that is based on perfection, the hope that everything goes right without a hitch. That’s the old normal. And then there is the debt that people enter into so they can send their kids to a college that they can’t afford to go to, and they finance it by taking out a loan to make it happen. People choose to go into debt in order to lead a life style above what they can afford. They would rather go on a vacation or buy a new car and a new large screen TV than to pay up debt or, God forbid, save. Our entire society is based on image and consumption. TV and magazines constantly remind us that we all should strive to be thin, sun tanned, drive an expensive car, wear a Rolex, live in an oversized home in the suburbs and it’s fine to do it on credit…. This life style works - until it doesn’t. All it took was The Great Leveler . As my friend Rick so aptly put it, “the weaknesses were always present.”

What will life in America look like a year or two from now? It is my belief that the rich will be richer (what else is new? They make the rules.) The poor will be poorer AND the middle class will be decimated. A large percentage of the middle class will be booted out of the middle class and end up in the poor, or almost poor category. People will lose their homes and be forced to rent an apartment. People will have their cars reposed. Luxury items and vacations will be eliminated. Conspicuous consumption will be frowned on. We are not going back to the way it used to be. The “way it used to be” is gone forever. It’s all because the DEBT bubble burst. And when a bubble is popped, it doesn’t just go down a little, it collapses . It is the debt implosion that will cause the dislocations and it is the debt implosion that will cause the coming hyperinflation which is the central banks way of dealing with it (more on that in a bit).

The social welfare network will be strained to the limit and it will have to be expanded. That means more government spending (and control), more debt, larger deficits, more monetizing by the Fed. All of that GUARANTEES stress on the dollar and that is exactly the environment in which gold and silver flourish.

I want to spend a moment on hyperinflation. Do you have even the slightest doubt that this is where things are headed? If you study history and understand what happens when a country over-prints its currency and monetizes its debt then you shouldn’t. The Fed (and all of the other major central banks) has unleashed a policy of print, print and print some more. They have made Bernanke’s “drop hundred-dollar bills from helicopters” look like child’s play. The Fed’s balance sheet will double this year, and our deficit could reach $3.5 trillion or more this year. Everything is being papered over. This has never worked before and it won’t work now. There will be casualties and the main casualty will be the dollar. Yes, we will get hyperinflation, which will be in response to the Greatest Depression we are heading into. Remember, the virus didn’t cause the economic upheaval. “The weakness was always present.” It would have happened anyways, but the Coronavirus just forced the timing.

The formulae looks like this – depression, hyperinflation, then depression. But this time the hyperinflation will not be a localized event, it will be a global event. Why? Because the dollar is the world’s reserve currency so everyone will be affected. Can you imagine the rush into gold and silver, a global rush, that will ensue? Trust me, if you don’t have your ounces soon, you will not be able to source them later, at any cost. This is no longer a “hypothetical” it is now a reality.

Many of my religious friends (Jewish and Christian) tell me “it’s God’s will.” They could be right, but I believe we were given free will to make our own choices and will sink or swim based on our choices . I studied Predestination vs Free Will in my philosophy courses while in college. Predestination never worked for me, because if that were the case, no one would be responsible for their actions, which would have been pre-ordained. Understand that you have the ability to choose NOW on how to allocate assets in your portfolio, I suggest you think long and hard about how paper assets will fair versus gold and silver in the new world that has descended upon us. It is a new world now and your past experiences will not guide you on how to act going forward. Tomorrow is nothing like yesterday.

More and more it appears that we will be forced to abandon the dollar and use a new digital currency that will replace it. I am not about to discuss the pros and cons of this mainly because there will be NO pros. You will lose all privacy and will be taxed on every transaction. This is another benefit to owning gold and silver. I always maintained that a key benefit to gold and silver was PRIVACY. Once we enter the digital currency world, that benefit will be more important than ever. You will be able to barter or trade gold and silver outside the system. So, think about that in addition to the “preservation of your wealth” aspect of owning precious metals.

It is not my goal in life to “save” anyone. I find it to be difficult enough just to save me and my family. Most other people don’t listen anyways. Especially if your message is “doom and gloom”. I am not a pessimist. I am a realist who sees things as they are and that has led me to see things in a negative way. Rather than sulk and complain, I make CHOICES that help keep me out of harms way. And if that means being early, then so be it, because in this case you can’t afford to be late.

Another of my strong beliefs is that most people are born with the ability to set the course of their own destiny. It is usually based on their choices. We have many choices to make and most of them are not particularly important, BUT there will be a few choices we must make that will make the difference between success and failure in our lives. We are now faced with one of those life altering choices – do we choose to believe life will return to the old normal? Will our money be safe in traditional investments like stocks, bonds and real estate? Or will the world forever be different and our future is one that will include a Great Depression and a currency collapse and hyperinflation? This is a choice you must make. If you don’t choose, the markets will choose for you. Either you are all in or you are all out. There is no middle ground here. For those of you who think people like me, who have been warning of this outcome for a long time, don’t deserve any credit for their insight, because “even a broken clock is right twice a day,” I say – so what! This IS ONE OF THOSE TWICE A DAY TIMES.

There are none so blind as those who refuse to see. Open your eyes; what is happening may be a new experience to you, but it is crystal clear. Only false hope will keep you from seeing the new reality. I remember Richard Russell (he was the best) writing that if all you have to going for you is hope, you are in big trouble.

HOPE: It’s human nature to be optimistic. It’s human nature to hope. Furthermore, hope is a component of a healthy state of mind. Hope is the opposite of negativity. Negativity In life can lead to anger, disappointment and depression. After all, if the world is a negative place, what’s the point of living in it? To be negative is to be anti-life.

Ironically, it doesn’t work that way in the stock market. In the stock market hope is a hindrance, not a help. Once you take a position in a stock, you obviously want that stock to advance. But if the stock that you bought is a real value, and you bought it right — you should be content to sit with that stock in the knowledge that over time its value will out without your help, without your hoping.

So, in the case of this stock, you have value on your side — and all you need is patience. In the end, your patience will pay off with a higher price for your stock. Hope shouldn’t play any part in this process. You don’t need hope, because you bought the stock when it was a great value, and you bought it at the right time.

Any time you find yourself hoping in this business, the odds are that you are on the wrong path — or that you did something stupid that should be corrected.

Unfortunately, hope is a money-loser in the investment business. This is counter-intuitive but true. Hope will keep you riding a stock that is headed down. Hope will keep you from taking a small loss and instead, allowing that small loss to develop into a large loss.

In the stock market hope get in the way of reality, hope gets in the way of common sense. One of the first rules in investing is “Don’t take the big loss.” In order to do that, you’ve got to be willing to take a small loss.

If the stock market turns bearish, and you’re staying put with your whole position. and you’re HOPING that what you see is not really happening — then welcome to poverty city. In this situation, all your hoping isn’t going to save you or make you a penny. In fact, in this situation hoping is the devil that bids you to sit — while your portfolio of stocks goes down the drain.

In the investing business my suggestion is that you avoid hope. Forget the siren, hope — instead embrace cold, clear reality.

By all means, do watch this presentation, if for no other reason that you should be aware of what “they” don’t want you to know, and the conclusions drawn are all FACT and DATA based conclusions. They are not subjective. It is a fairly long video so make sure you are in the right frame of mind to watch it. And then, YOU make up your own mind. (Click on the header to watch the presentation)

YouTube Censors Viral Video Of California Doctors Criticizing "Stay-At-Home" Order

...deleted after racking up over 5 million views .

Egon von Greyerz

US DEFICIT $4T & DEBT $28T – WHERE IS THE MONEY COMING FROM?

Will the Coronavirus be the catalyst of not just a depression but also major reduction in global population? The growth in world population since the 1850s has been explosive. In the 1850s there were 1 billion people and today we are 7.8 billion. Although many “experts” have extrapolated the growth to 10 billion and more in coming decades, this has in my view not been based on sound reasoning. Instead, as I been writing about and discussed many times the spike in population that we have seen in the last 170 years will not end well.

Anyone who can read a chart knows that a spike on a major sample doesn’t continue straight up. And it doesn’t just correct sideways either. At some point, a spike up is always corrected by a major spike down. I talked about this in my article from April 2018 . Below is an extract from this article:

WORLD POPULATION WILL DECLINE

The world has had many crises of various degrees in the past, be it the Black Death in the mid 1300s when an estimated 75 to 200 million people died in Europe and Asia. Around 50% of Europe’s population is estimated to have perished. In WWI around 20 million people died and in WWII around 60-80 million. So major catastrophes are part of history and the coming one could also see a major reduction in world population be it from economic crisis, famine, disease, social unrest or war.

From the mid 1800s to today world population has grown from 1 billion to 7.6 billion. If we look at the graph it is a straight spike up in the last 170 years. From a technical perspective, spikes up are always corrected by a spike down. We can’t tell when exactly that spike down will come but it is likely to be connected to the coming collapse of the financial system. A reduction in global population of 3-4 billion in the next few decades is a real possibility.

As I have stated in many recent articles, Coronavirus is not the reason for the downturn in the world economy that is now starting but the catalyst. I did not forecast that a pandemic would be the trigger. But in retrospect, the end of the biggest economic bubble in world history really had to come with an unexpected and unconventional catalyst.

A NEW MIRACLE PARADIGM OR A DISEASED SYSTEM?

That the world economy for the last 100 years was totally dependent on credit and printed money is not a new miracle paradigm but the sign of diseased system. Issuing fake money at zero cost always had to end badly. In a perverse way it is almost ironic that the trigger for ending this sick financial system would be a pandemic disease. But this is Murphy’s law. If anything can go wrong, it will go wrong in the worst possible way and at the worst time.

As I said in my article above, “So major catastrophes are part of history and the coming one could also see a major reduction in world population be it from economic crisis, famine, disease, social unrest or war.”

Now the world is in a situation when all of those factors will probably come to pass. We already have the economic crisis and we have a disease. There is not a major famine yet but this is likely to come. Social unrest and war are probable consequences of these problems. Hungry and poor people will rise against their leaders and against the elite. The differences in income and wealth between the rich and the poor have created an untenable situation. This is virtually without exception how every revolution starts.

WHERE IS THE MONEY COMING FROM?

Central banks around the world are of course doing their best to stop the world from going into poverty. They are now creating unlimited amounts of money in order to assist small and big businesses as well as individuals. Everybody is expecting a handout whether it is a major US business or an unemployed individual. It is of course wonderful that everyone gets help but no one asks where is the money coming from.

Nobody worries about that THERE IS NO MONEY. The $ 100s of billions and trillions that are being given to the needy don’t exist. They are just created out of thin air. Since the crisis started in the early autumn of 2019 with the Repos, the Fed’s balance sheet has gone up by almost $3 trillion to $6.5T. But this is just the beginning. The forecast is that it will reach $9T in June and probably $12T a couple of months later.

What we must remember is that this crisis didn’t start now but in 2006 when the Fed’s balance sheet was $800K. By 2012 it had gone to $3T. So, in the next few months, the balance sheet will explode by 3-4x to $12T.

The problem with most forecasters and economists is that all they understand is just to extend the current trend. But they don’t even do that because if they had, they would have realized that US debt has doubled every 8 years since 1981.

So, the US is likely to have a debt of $40T in 2025 but that figure is most probably much too low. Because next we are going to see failures not just in the economy but also in the financial system. At that point, the current rescue packages of $2-5T will be dwarfed by bank rescues of $10s to $100s of trillions. And when finally, the derivative bubble bursts we could be into the $quadrillions. Again, most people will today consider these figures as sensational scaremongering. But that is the risk the financial system is now facing and we are now in a phase when the surprises will be much worse than anyone can imagine.

NOTHING WILL BE THE SAME

For decades the world has been in an Alice in Wonderland fantasy phase. It all started with private bankers taking control of the financial system in 1913 when they founded the Fed for their own benefit. For almost 60 years their power grew gradually but then in 1971 when Nixon closed the gold window, all hell broke loose. Money printing and credit expansion have grown exponentially since that time.

The US already started what is now 60 years of deficit spending. Every single year since 1960, the US has a deficit. The Clinton surpluses in the late 1990s were all fake since debt continued to increase. Just imagine that the mighty US has lived on a lie for more than half a century. The economic miracle is not a miracle at all but just printed wealth.

Since the main aim of politicians is to buy votes, Nixon had no choice back in 1971. The US had already at that point been running a deficit for 10 years. With a gold standard, it is necessary to run an honest financial system without deficits. Otherwise you lose all your gold and the currency collapses. Since Nixon had no intention to run surpluses, he could not be tied by a gold standard and therefore abolished the gold backing of the dollar. The consequences were of course disastrous and the dollar has fallen ever since.

The chart below shows the not so mighty dollar against the Swiss franc since 1971. The dollar has so far lost 78%. The technical target tells us that the dollar will come down another 50% against the Swissy. But we shouldn’t measure currencies against each other since they will all go down to their intrinsic value of ZERO.

Instead, if we measure the dollar against gold it is already down 98% since Nixon’s fatal decision. The remaining 2% fall to Zero is likely to happen in the next 1-4 years. But we must remember that this involves a 100% fall from today of most currencies against gold.

US DEBT FROM $800 BILLION TO $76 TRILLION WITH 60 YEARS OF DEFICITS

Since the US started running deficits in 60 years ago, total US debt has gone from $800 billion to $76 trillion today. What we are seeing is a fantasy world all built on debt, federal, state, consumer, mortgage, auto, student etc. The list is endless how to create fake wealth just based on debt.

But the US is now coming back out of the Rabbit Hole and back to reality which will be the biggest shock in history. The Coronavirus was the perfect catalyst albeit horrible. The trillions of fake money and fake assets will now implode and so will the US economy. The rest of the world will sadly follow.

What the world has experienced in the last 100 years is not real capitalism. It more resembles Voodoo capitalism. Central bankers, led by the Fed, have successfully adopted Mayer Amschel Rothschild’s philosophy: “Permit me to issue and control the money of a nation, and I care not who makes its laws.”

US DEFICIT $4T & DEBT $28T – WHERE IS THE MONEY COMING FROM?

WORLD POPULATION WILL DECLINE

A NEW MIRACLE PARADIGM OR A DISEASED SYSTEM?

WHERE IS THE MONEY COMING FROM?

As I discussed in last week’s article the budget deficit will also get out of hand. In the current year the US could easily reach a deficit in excess of $4T, taking the debt to $28T. If we just go back 3 months, who would have believed a Fed balance sheet reaching $12T and a US debt of $28T? These would have been seen like preposterous fantasy figures. The problem with most forecasters and economists is that all they understand is just to extend the current trend. But they don’t even do that because if they had, they would have realized that US debt has doubled every 8 years since 1981.

NOTHING WILL BE THE SAME

US DEBT FROM $800 BILLION TO $76 TRILLION WITH 60 YEARS OF DEFICITS

By doing this, they have put a spell on the global financial system and lumbering it with debt that could never be repaid. The beauty of having done this from the bankers’ point of view is that they are the only ones who can lift the spell. First, they are instrumental in creating a debt infested world economy and then they are the only ones who can come to the rescue and “save” it. And in both instances, they benefit greatly.

The problem is that the cure will be even worse than the original action. A best burdened world can never be saved by more debt. But this is the only remedy the central bankers know. So next we will see unlimited money printing that crushes currencies and leads to a depressionary hyperinflation.

MARKETS

In real terms all bubble assets will now crash. Real terms means in stable purchasing power and measured against gold. So, we will see stocks, bonds and property decline by 90-100% against gold. In nominal terms, stocks might go up initially with hyperinflation. But that will only be illusory gains.

Stocks around the world fell initially by around 40% and have now recovered half of that fall as stock investors have been buying the dips in the hope that central banks will save them yet another time. But they will soon have their next shock. Markets could start their next leg down already in the coming week. Or it could take 2-3 weeks. What is clear is that a secular bear market has started which has a very long way to go.

GOLD – STILL MASSIVELY UNDERVALUED

For 20 years I have talked about the importance of wealth preservation in the form of physical gold. During that time gold is up 6-7 times depending on which currency you measure it in. But still, less than 0.5% of world financial assets are in gold.

Gold is still incredibly undervalued in relation to the growth of global money supply. It is still possible to get gold, but the physical market is under real pressure. The three largest refiners in the world, based in Ticino Switzerland, are now working at 30-40% capacity. So major shortages are developing. Spreads are now much higher but the price for wholesale gold is still governed by the paper market.

This is a ridiculous situation that will not last long. Both the Comex and the LBMA are under enormous pressure which soon will lead to massive delivery problems and a major price squeeze. So, the window of opportunity to acquire physical gold at current prices will soon close.

Remember that gold is real physical wealth as well as insurance against a financial system that is unlikely to survive. Gold can still be bought with overvalued fiat money at prices substantially below its real value but not for much longer.

Egon von Greyerz

Founder and Managing Partner

Matterhorn Asset Management

Bill Holter

“Negative Oil”

I made the comment on Saturday's call, "we had negative interest rates, now we wait for negative oil prices". I received a few questions because the negative price of anything makes no sense, right? Well actually it does. Because demand has dropped so precipitously and production has continued unabated, supply is piling up. In the real world this is a huge problem because the oversupply must be stored somewhere. Oil is now being stored on previously empty tankers because land-based storage facilities are overflowing.

It is now estimated that in roughly 30 days there will be no more spare capacity for storage. It will be at this point producers will need to "pay" (as in accept a negative price) for produced oil. Crazy yes but also reality. Beyond the obvious that low (or negative) oil prices will destroy individual companies and thus the entire industry, there are other ramifications more nuclear to the financial and real economic systems.

First, think of the unemployed. The oil patch will be forced to let several hundred thousand workers go ...and then of course the ripple effects. But the bigger hit will be the ripples financially. Think of all the debt that will default? The producers themselves will struggle and many will fail. When they fail, payments will also to various areas including and specifically on their debt. Who owns the debt? It is spread far and wide but these bondholders who previously believed they sat on secure assets will find out they are also the big losers.

Another death will be the "petro" dollar. The dollar has been supported from oil revenues being reinvested into Treasuries since 1973. Yes, the Fed will step in to replace the demand but this is outright monetization and anyone with half a brain knows where this will end up. In fact, oil nations who previously supported the petrodollar will likely be seen as sellers of US Treasuries just to stay afloat adding more pressure to bond prices and thus interest rates!

$11 oil is not sustainable and will destroy the entire industry if not the entire financial system … but we very well may see negative prices before the anomaly ceases. Negative interest rates and negative oil prices make no sense whatsoever, negative rates have already occurred, negative oil prices are the other shoe to drop.

For those who believe the ESF and PPT can rig all prices all the time, what is happening in oil should show you there are loose ends or unintended consequences not previously thought of. "They" have lost control of the car and have only the gas pedal left as the brakes failed and the steering wheel is unattached. Not that you should forget about everything else but just oil prices alone guarantee massive widespread debt failures/bankruptcies. "Someone" loses and loses huge which spills over in a massive ripple effect. The problem now is that ripples are coming from all directions like a kid just who threw a handful of stones into a pond. ...Oil is certainly one of the larger more important stones!

Standing watch,

Bill Holter

How bad are things now? Here is a sampling of headlines from Zero Hedge

"It Wasn't A Black Swan" - Nassim Taleb Blasts Bail-Outs As Misguided And "Morally Unacceptable"

"To rescue investors who knowingly risked their capital, and should now be left to suffer the consequences, since those are the rules of the game..."

Anatomy Of A Fiat Currency Collapse

...infinite money-printing is set to destroy fiat currencies far quicker than is generally thought... as policymakers repeat the mistakes of John Law in France 300 years ago almost to the letter, but this time on a global scale.

Market Stalls, Is The "Bear Market" Rally Over?

“For many individuals, they will 'feel like' they are 'safe'... Such is how 'bear market rallies' lure investors back in just before they are mauled again in 'Phase 3'...”

Japan Printer Go Brrr As BOJ Launches Unlimited QE, Expands Corporate Bond Buying

With the BOJ decision leaked so far in advance today's announcement was just a formality, there wasn't even a trace of a reaction in the market.

$6 Trillion Contraction Could Be "Too Optimistic", Economists Warn Eyeing Second COVID-19 Wave

"The economy has entered a downturn of unprecedented speed and severity, with most advanced economies facing their weakest performance since the Great Depression."

White House Economic Adviser: Q2 GDP Will Be Biggest Negative Number Since Great Depression; -20% To -30%

"The question is what happens next ..."

Physical Gold Premiums Soar To Highest Since Crimean Conflict As Congressman Questions COMEX

“For every coin we make, be it gold or silver, we could probably sell five or six of them...”

Hickey: "This Is A Perfect Environment For Gold"

"At this point, it’s an all-out printathon ..."

Kitco News

Investment demand to drive silver price to $19 - World Silver Survey 2020

Neils Christensen

( Kitco News ) - A global slowdown caused by the global COVID-19 pandemic will weigh on silver industrial demand this year, but according to the latest research for the Silver Institute, investment demand will drive prices higher in 2020.

“The silver market is small so it doesn’t take a lot of money to really push prices higher,” said Phillip Newman, director of Metals Focus, the research firm behind the Silver Institute’s World Silver Survey 2020.

I n a telephone interview with Kitco News, Newman said that investor demand for silver, led by a rally in gold, could push prices to $19 an ounce this year. The comments come as silver prices struggle to hold gains above $15 an ounce. May silver futures last traded at $14.96, up 0.6% on the day.

Metals Focus’ price target represents a more than 26% gain in silver from current prices. However, Newman warned that analysts still expect silver to underperform gold, which will remain the ultimate safe haven as coronavirus uncertainty continues to dominate the global economy and financial markets.

Looking at the gold/silver ratio, Newman said it should come down from last month’s record highs but still remain elevated around 90 points. The ratio traded around 114 points Wednesday, meaning that it takes 114 ounces of silver to equal one ounce of gold.

“The rally starts with gold and then moves to silver as investors start to see value in the precious metal,” he said.

One of the key indicators that Newman is watching to gauge silver’s investment potential is speculative interest. Newman noted that the latest trade data from the Commodity Futures Trading Commission shows that net-bullish positioning in silver is at its lowest level in a year.

“There is significant room for speculative investment to come back into the market,” he said. “That is one of the most important investor indicators we are watching right now.”

Along with stronger gold, Newman said that lower volatility in silver prices will also help to attract investors back to the market.

Along with strong investor interest in silver-backed exchange-traded products, Newman said that analysts also expect to see higher demand for physical investment. Metals Focus expects demand for silver bullion and coins to rise 16% this year.

The optimistic silver price outlook comes as industrial demand is expected to fall this year. Overall the firm sees physical silver demand dropping 3%, totaling 963.4 million ounces.

The firm also noted that this is the lowest demand level for the precious metal since 2009.

Helping to provide some balance to the marketplace is the fact that Metals Focus said that supply is also expected to drop by 4% this year. Global silver supply is expected to come in at 978.1 million ounces in 2020, also the lowest level since 2009, the firm said.

At the start of the month, Mexico declared mining a non-essential service, which forced many mines to shut down their operations. Mexico is the world’s biggest source of primary silver and represents about 23% of total global supply.

Crunching all the numbers, Metals Focus said that silver’s supply surplus is expected to total 14.7 million ounces, a drop of 53% compared to the stockpile created in 2019.

Although silver’s industrial demand is expected to be lackluster this year, Newman said that he is optimistic the sector will survive the impending global downturn.

For example, weak global growth and low oil prices are expected to weigh on solar power demand. Still, Newman said that renewable energy will still represent an important market for silver.

“Some countries are expected to postpone new capacity for solar energy, but the sector is solid enough to survive this drop,” he said.

Newman said that the electrification of the auto sector is also a growing area of demand for silver. A global depression will weaken car sales, but demand for silver will remain.

Every new car that comes out uses more than the older version,” he said.

Ted Butler: Gold and Silver Relative Valuation

Particularly at times like these, when we're experiencing things few would have imagined, it's important to reach out for that which gives long term perspective and grounding. These days, it's easy to get wrapped up in the short term and lose track of the long term. It's no different for gold and silver. And I freely admit this is one of those "do as I say, not as I do" things, as it's hard for me not to focus on the here and now in matters related to gold and silver.

Fortunately, there is something readily available that helps to filter out short term noise and provides long term perspective. That something is relative valuation. In fact, relative valuation is something widely followed and discussed in the form of the silver/gold price ratio and I'd like to take a closer look at it today.

One thing that makes the silver/gold price ratio so special is that it's hard to come up with a measure of relative valuation between two highly comparable items that has a longer history. Quite literally, the silver/gold price ratio goes back to the dawn of civilization, some 5,000 years ago. The great thing about relative price comparisons is that they eliminate all outside macroeconomic influences, like changes in currencies or rates of inflation. Both gold and silver, for instance, have witnessed the birth and death of every currency in history, as well as every economic boom and bust, great migration and pandemic ever recorded.

Gold and silver have been embedded in the very fabric of the human existence, serving as money and objects of value since history has been recorded, providing the motivation for wars, to the search for new lands, to even the betrayal of Jesus Christ (for 30 pieces of silver). For 97% to 98% of the past 5,000 years, both gold and silver were valued for the same reasons, namely, as money or stores of value or as objects of value, including jewelry and adornment.

Notes and Quotes

The nonpartisan Congressional Budget Office predicts U.S. GDP will contract at nearly a 40% annual rate in the second quarter, with unemployment cresting at 16% in the third quarter. But even next year, the CBO sees the jobless rate still averaging above 10 percent.

"Balance sheets are expanding, debt levels are rising, and government spending is going up," Meir said. "All of these things should be bullish for gold. We will move gradually higher, possibly get close to $1,800 over the next two weeks or so."

Gold prices have a chance to challenge 2012 highs this quarter, added Standard Chartered precious metals analyst Suki Cooper.

The second quarter is poised to be much worse, Andrew Hunter, senior US economist at Capital Economics , reminded clients on Friday. The research firm expects US economy to contract at a rate of 40% between April and June. –

If I thought, "I'll buy gold once I need it" or "I'll sell USD after a superspike and then move into gold," what happened last week in oil markets would give me pause. The odds of "You're either going to be there when it happens or you're not" in gold markets may have just risen.

Gold is a consequence of a totally mismanaged globally economy.

Less than ½% of financial assets are invested in gold.

Gold won’t be confiscated. Taxation is much more efficient than gold confiscation.

In 1933 gold held outside of the US was not confiscated.

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