Many are asking what's happening out there – Gold, silver, markets, cryptos, housing. They all seem to be in flux right now, and fear seems to be setting in and pushing the notion that we are preparing for something bigger.
I have been struggling to come up with an accurate way of describing the current state of the U.S. and Canadian economy because none of the traditional labels seems to apply.
Inflation is out of control, 8.3% reported this week in the U.S., which means street-level inflation is now well above 10% and that typically happens when an economy is overheating. In Canada, our next CPI report is coming shortly, and I have no doubt we will see inflation in our country push 7% plus, meaning that street-level inflation is above 10%. What a time to be adequately prepared with a solid and diversified wealth strategy that could include gold and silver.
With interest rates and inflationary pressures rising, it would appear to someone outside that the economy is overheating. But of course, the U.S. economy is not overheating. If U.S. GDP falls once again during the second quarter, that will officially confirm that we are in a recession right now, and that would make it easy to define.
I have even suggested that "stagflation" would be a good description of the coming economic conditions. Still, the truth is that what we are facing is so much worse than anything that we dealt with during the 1970s that stagflation would be a gentle way of putting it.
How bad is inflation? Does it reflect the truth of the situation?
The Bureau of Labour Statistics just informed the U.S. public that the consumer price index is 8.3 percent higher than it was a year ago…That is an alarming number, but it doesn't accurately reflect reality.
If inflation were still calculated the way that it was back in 1980, the official rate of inflation would be well over 15 percent right now in the U.S. and over 10% here in Canada, and that is far worse than at any point during the Jimmy Carter era of the 1970s/80s.
The actual rate of inflation is now the highest that it has ever been in the entire modern history of the United States, and very closely is, our country Canada right behind that. As we get our updated reading shortly in another week, we will witness another milestone in recent history. Higher inflation is not the type of milestone that we will celebrate.
The term "meltdown" comes to mind, but I don't think that completely captures what we are facing either. Of course, both Trudeau and Biden say they have plans, and both insist that reducing inflation is their "top economic priority."
Meanwhile, tens of millions of ordinary Americans and Canadians continue to suffer as consumer prices for everything spiral out of control deeply. Much to my amazement, I even caught CNN admitting this week that some Americans are "skipping meals" these days to make ends meet. Folks, this is not made up. Your neighbours are in trouble, and you don't realize it yet.
If people are skipping meals already, what will things be like a year from now when economic conditions are even worse?There have been multiple reports of a high percentage of Canadians living within a few hundred dollars of collapse in Canada.
- 53% of Canadians on the brink of insolvency: MNP survey (A year old, so imagine what it is now?)
- Canadian business insolvencies are up, and consumers likely to follow
- 39% of Canadians Say Rising Rates Could Drive Them to Bankruptcy
Most people don't realize this, but we are incredibly vulnerable. When the next significant downturn strikes, millions of Americans and Canadians will be instantly wiped out. And in the world's largest economy, the U.S., According to a report just released, almost two-thirds of all Americans are currently living paycheck to paycheck.
Well, for those who can balance. There is always time for a change for those who have the budget, have made the gains have disposable income. That time is now. Being diversified and looking at our wealth with a pragmatic approach makes it simple to understand that the bigger it is, the harder it falls. We are here now on the precipice of the next systemic economic collapse.
What you do with your and your family's wealth could be the most significant decision of your life over the next three years or so. Gold and silver should be part of the strategy to protect and grow your wealth, in my humble opinion, because witnessing good friends and family living paycheck to paycheck is horrifying.
Don't get me wrong. I know some of you will continue to live on the edge, and to some, that will be fine as long as a paycheck keeps coming in like clockwork. But if things suddenly shift, millions of Americans and Canadians could suddenly find themselves plunged into poverty.
To this, I would say there are lots.
- No real wage growth.
- GDP that is not organic and built on the back of debt and credit expansion.
- Rising interest rates that historically end market booms.
- Inflation that is so rampant it is altering your way of life.
- Housing markets that are profusely overvalued by all worldly measurement standards.
- Stock evaluations at historic highs, way above the norm.
- Debt servicing levels approaching 50+% of our income.
Markets are now experiencing a shock of sorts that leads them to significant point losses followed by uncertain new money dipping in trying to give the impression that it's a value buy. Billions of dollars evaporated in the stock markets just this week alone.
And I would be negligent if I did not mention that financial markets were way down yet again this week. Big blue-chip companies like Tesla, Apple, Netflix, Virgin Galactic, Revlon, and Goodyear are down 10,20,30,50% plus, and several indexes are also way down year to date (YTD).
Year To Date (At time of writing, May 13th)
· Dow Jones index down 11.35% YTD
· Nasdaq 100 down 23.75% YTD
· SPX down 15.5% YTD
· TSX down 7% YTD
Sometimes you have to see through it all to understand that limiting the amount of loss while still holding something of value can be the best approach. But other ominous warning signs exist.
Cryptocurrencies were "supposed" to be the new alternative options for protection. One of those is Bitcoin. Whole countries have bought now, El Salvador being the latest. But oh, how the mighty have fallen. Cryptos are probably the biggest news of all right now.
Cryptos are crashing harder than Stephen Lecce at a frat party!
If you are thinking about buying into cryptocurrencies, please take a good long hard look. As I stated on this week's show, cryptos are for those with deep pockets. The news is not good, folks.
Coinbase, one of the premier major crypto exchanges, is coming apart at the seams as we speak due to the pressure being placed on Bitcoin.
If you have money with Coinbase, you may want to consider your options because it is being reported that "users might lose all the cryptocurrency stored in their accounts" if Coinbase goes bankrupt.
At the time of writing (May 13th)
- Bitcoin is down 35% YTD
- Ethereum down 43% YTD
- XRP down 48%
- LUNA is down 100% YTD Gone, evaporated
Where does this insanity stop? We need to stop believing that something such as a NON PHYSICAL token will emerge as the prevalent way to provide stability and a replacement worldwide for something like gold which has been around for thousands of years. It simply isn't going to happen. I feel so sorry for anyone who does have new money in cryptos because it is a bloodbath.
But suppose you want something that is a store of value, that has a history and a track record of holding value and purchasing power. Something tangible, crisis-proof, loves volatility and tends to have incredible shorts bursts of huge gain from time to time as icing on the cake, then look at gold or silver.
Silver is the ONLY commodity on the face of the earth that is sitting below 50% of its all-time high. It's used in everything we touch:
- Tablets, to cellphones.
- Computers to solar panels.
- Bearings, to batteries.
- Water preservation to washing machines.
Silver is recession-proof because of its inelastic demand. There is a shortage of silver worldwide, and it has the same ability to protect purchasing power over long periods that gold does.
Never forget-Your money, your way!
Be safe out there. Watch your money. Keep your hard-earned dollars in check by keeping the people you work with in check. You have worked way too hard, for far too long, to lose it all now!
What are the options?
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Yours to the penny,