It was another “Inflation on” week with my IDW reaching another new high. It rose from 173.87 last week to 175.65 as of today. No doubt inflationary pressures and increased equity prices have put some downward pressure on the T-Bond. With rising levels of price inflation, you might expect the gold and silver to rise but perhaps it was the “stronger” dollar that put downward pressure on the precious metals. The dollar rose on the index to 90.066, up from 89.94 last week. Or it might very well be policymakers with their own propaganda policies in play. As Chen reported, “someone” suddenly sold billion worth in the market before the U.S. markets opened, leading to a sharp downward spike. Could it be that someone wants to send a message that with Trump now out of the way and the global
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It was another “Inflation on” week with my IDW reaching another new high. It rose from 173.87 last week to 175.65 as of today. No doubt inflationary pressures and increased equity prices have put some downward pressure on the T-Bond. With rising levels of price inflation, you might expect the gold and silver to rise but perhaps it was the “stronger” dollar that put downward pressure on the precious metals. The dollar rose on the index to 90.066, up from 89.94 last week. Or it might very well be policymakers with their own propaganda policies in play. As Chen reported, “someone” suddenly sold $2 billion worth in the market before the U.S. markets opened, leading to a sharp downward spike. Could it be that someone wants to send a message that with Trump now out of the way and the global elite back in charge there is no need to buy the barbaric relic? If that is what caused today’s $64 spot market decline, it’s hard to see how natural market forces will allow that kind of rigged suppression to continue for long. Immediately President-elect Biden is saying that he will sign off on an immediate $10,000 debt forgiveness for every college student. Of course, there is growing reason that the free markets will likely be a distant memory, given the Marxist leanings of the Democrats who rode into power on our Trojan Horse President-elect.
There is real reason for concern that suppression of our First Amendment rights along with even more pronounced economic suppression may well lead to even more violence and chaos. The shutdown of restaurants and with that millions of small business people is leading to impoverishment and demolition of the middle class beyond anything any of us could have imagined. This is sad because it is a well proven fact that COVID-19 isn’t spread in restaurants. To be completely honest with you, there has never been a time in my 73 years when I have been as fearful of our country’s future as now. A ruling elite has taken charge and are denying the voices of millions of Americans. It started during the Obama years, which were spelled out when Hillary Clinton looked with disdain at culturally conservative Americans who have taken the Constitution seriously. Rather than ask why Trump won the 2016 election, the Democrats chose to make up the Russia hoax story even as CIA heads like Clapper lied under oath, denying that the CIA was spying on Americans, as revealed by a genuine whistleblower named Edward Snowden who proved that was the case.
So I’m not really sure about what I will be doing in the future. I’m 73 years old, soon to be 74, and I ask myself is it worth trying to work hard and play by the rules when the rules are no longer equal for all Americans. What we now have are tyrannical rulers who are going against what Martin Luther King Jr. fought so hard, namely, equality of opportunity under the law. What the WOKE Democrats are wanting is equality of outcomes. I don’t really understand how that is good for America or for anyone for that matter.
What makes for peace and prosperity of a nation? Ray Dalio said the following about that: “One timeless and universal truth that I saw went back as far as I studied history, since before Confucius around 500 BC, is that those societies that draw on the widest range of people and give them responsibilities based on their merits rather than privileges are the most sustainably successful because they find the best talent to do their jobs well, they have diversity of perspectives, and they are perceived as the most fair, which fosters social stability.”
Everything I can see happening in America is going exactly in the opposite direction of those best practices as this very strange idea of “woke” strives to reward failure and penalize success. It is the opposite of a meritocracy. It suggests that the only reason some people have not succeeded is because of some kind of social or racial injustice. While there is always bound to be some of that, I would ask anyone reading this now to tell me what nation has done more internally to try to fix those problems without punishing or suppressing a major portion of the population to even the playing field. “Equality of outcome” will never fix anything. It will only cause pain, suffering, and poverty. But that is what the Democrat party seems to be all about now.
Therefore, I am seriously considering whether I should continue publishing this letter. I admit I am depressed because I see the American ideals that came from 1776 morphing into a Marxist hell hole where what you have will be determined more by your skin color, your sexual orientation, your religion or lack of religion. I ask myself, what is the use of working under those conditions? As a Christian, I believe there are of course answers, based on my conviction that there is something glorious to live for beyond the limited number of years I have left here on earth. It is also true that real happiness in life comes from helping others. So to the extent I may be doing that in writing this letter, perhaps I will continue on as long as the good Lord gives me the faculties and facilities to do so.
But I digress. Regarding this past week you will notice a large amount of cash in my personal IRA. I have increasingly been of the mind that we may be nearing a bear market in equities. In an excellent article he wrote, legendary investor Jeremy Grantham started out his letter as follows: “The long, long bull market since 2009 has finally matured into a fully-fledged epic bubble. Featuring extreme overvaluation, explosive price increases, frenzied issuance, and hysterically speculative investor behavior, I believe this event will be recorded as one of the great bubbles of financial history, right along with the South Sea bubble, 1929, and 2000.” I would encourage you to read this well-written article, titled, “Waiting For The Last Dance,” which you can find at this link: https://tinyurl.com/y3eefnn8
That article started me thinking it might be good to build some cash just in case this legendary investor is right. Then at about 9:10 AM New York time I get an unexpected MSA letter in my inbox from my friend Michael Oliver with a heading “Gold-risk control/profit taking levels.” The letter suggested that, based on his momentum work, if gold broke below $1,872.40, “the action will be on last quarter’s momentum low. That in itself is of some concern as there are too many pullbacks that have halted just above the zero line/3-qtr. avg. Dropping to that red line again is of concern. Breaking that line by touching the zero line/3-qtr. avg. constitutes structural breakage (that price is $1835.75). Therefore, we suggest that $1872.40 is a first alert that there could be more downside, and $1835.75, if traded, constitutes breakage. Levels to consider as risk control.”
As I watched the price of gold plunge toward $1872.40 and then cut through it like a hot knife through butter, I sold a portion of both my IRA Gold (OUNZ) and silver (PSLV), thus raising the cash you see in my IRA portfolio above. Before that I sold Irving and Grande Portage, mostly because I can’t see any immediate (within a couple of weeks) share price movers for Irving; and the amount of my holdings in Grande Portage were rather insignificant, so I sold that as well, thinking about some other stocks I would like to buy or add to. But then came Michael’s message and no doubt I may have overacted. But as an old guy who has seen these movies many times in the past, I just know how much I would have loved to hold cash in the past when stocks get trashed.
Don’t get me wrong. I think we are at the start of a hyperinflationary event and I think that is why interest rates may already rising out of control for the Fed, as Alasdair Macleod recently pointed out that 10-yr. Treasuries have broken through the golden cross indicating a new major trend in higher rates may be in the cards. It seems entirely possible that we may be run through one more credit crisis before the first inflationary one is obvious to everyone, which is why I think you want to hold some gold but have some cash to be ready for bargain basement bottoms. That is where the real money is made, not chasing massively overvalued stock markets. It may very well be that gold holds in this area and then resumes a mighty move higher. But the opposite might also be the case if Michael’s breakage point is met. Meanwhile, gold exploration companies are cashed up and exploring full blast. It should be a great year for gold shares. In this issue, like most, I pass along the latest news with my own commentary. Enjoy and be safe in these trying times.