GOLD MAKES A NEW ALL TIME CLOSING HIGH: NOBODY HERE NOTICES

 

Gold continues to climb.  It's moved up over 100 dollars since the debate.  But all we can talk about is our domestic political situation - which is leading us to ruin,,,,  And not one person in a million can see it...

Why?

Gold loves the move towards autocracy.

Gold loves Tarrifs and trade wars.

Gold loves mass deportations that will devastate the suppy of labor in a country with a dangerously declining birth rate.

Gold loves tax cuts for the wealthy that lead to massive deficits.

Gold loves - more than anything elrse - the idea of a dependent Fed that will drop rates back to Zero on the orders of the President/Autocrat.

America thinks a Strong Man leader witll lead the county back to Prosperity.

We can't wait.

But look at the other countries with strong man leaders:

Some people think Hitler was good for Germany.  But Germany was devastated and didn't recover for 50 years.

Just look at Orban in Hungary.  Hungary is mired in a perma-recession with out of control inflation - that has moderated a bit from last year's 17 percent but is still decimating the middle class - or whatever's left of it.  True you don't have to worry about Ttrans-sexual athletes auditioning for school sports teams.  So if you care more about that than eating you're set.  Otherwise, it's a disaster.

Look at Putin in Russia.  Russia suffers from peremanent Stagflation and a decimated middle class.  Its offical growth rate is temporarily jacked by the wartime economy but life there is miserable - unless you are an Oligarch.  The young and educated are fleeing the country in droves. 

China, on the other hand,  is an animal we don't understand.  They are autocratic but the autocracy is committed to developing a free market economy - that is tighly regulated so that the top 5 percent can't fleece the bottom 95 percent.  This idea is so foreign to Western thought it's no good even trying to analyze it.  Over many years they may succeed.  For right now, suffice it to say that they view America as the number one impediment to acheiving their aims.  And they think that by de-dollarizing the world they will achieve financial dominance.

So far we are doing everything in our power to help them.

And the number one weapon we use to Help China is by weaponizing the dollar thus stoking inflation at home and encouraging de-dollarization abroad.

Why?

I don't know.  

It's so stupid it beggars belief.

But a lot of Americans seem to view it as a sign of strength

So, go figure...

Or don't figure... just buy gold...

THE US FISCAL HEALTH: NOTHING TO SEE HERE

 

The fact of the US fiscal situation is this: Defense, Entitlements and Interest Payments - three things that only go up - never come down - are now 120 Percent of tax receipts.

Do the math.  

All the difference to pay our obligations and anything discertionary: infrastructure, scientific exploration, disaster relief, war, ANYTHING comes from PRINTING MONEY:

INFLATION.

This is a fact.

This is another fact: nobody running for political office talks about this.  Because nobody has the courage to lose their job over telling the truth: we have to cut our spending.  (and tax cuts is the exact same thing as spending in this environment because they add to the deficit - the last three trillion of tax cuts added three trillion dollars to the deficit and that much more in interest payments.)

Nobody Cares.  Everyone complains.  But nobody is willing to even talk about the real problem. 

In stead, everyone talks about Social Issues, Lefties, Fascists, Socialists, White Supremacists : Fear, Crime, Immigration, Climate Change, Palestine, Abortion, Transgender High School Swimming Scandals, the war on the Bible, Gun Safety, the War on Christmas, Wokeness (whatever the hell that is), the war on Democracy, the war in the middle east, the war with Russia...

Anything but the one thing that really matters to everybody's quality of life - except the billionaire class.

And that is the fact that as our debt soars, our two fiscal choices are INFLATE or DEFAULT.

If we default all asset prices will crash and chaos will ensue. In the Chaos only gold and hard assets you can protect with your guns will survive.  So it is not likely the Govenment will choose to default.

That leaves Institutionlized Global Inflation forever - or at least until  we have a crisis stemming from that fact that nobody can afford anything.

In that scenarion every asset inflates - except bonds - and then as proift margins get crushed, stocks crash,  then as nobody but billionaires and private equity can afford a house, housing crashes,  and  then as everything becomes too expensive - everything crashes but gold.

That is where we are.  That is who we are.  It takes time to unfold.  But as Hemingway said: Gradually - then suddenly.

Prepare yourself.

UNDERSTANDING THE GOLD TRAJECTORY: TRUEFLATION

 

According to a recent study by Scott Golloway:

Boomers entering work force average entry level job adjusted for inflation: $70,000 (1970)

Gen Z entering the work force in the average entry level job $56,000

If that doesn't answer why 80 percent of the populace is angry and hopeless...

Add to that:

Annual cost of college as percent of income:

Boomer: 14 %

Gen Z: 42 %

Home price to income ratio

Boomer: 3X

Gen Z: 7X

Cost of McDonalds hamburger and fries 

Boomer (1970) 35 cents

Cost of McDonalds hamburger and fries

Gen Z: $7.75

And even more recently:

Average mortagage payment 2019: $1100

Average mortgage payment 2024: $2300

Average home cost 2019: $290,000

Average home cost 2024: 420,000

Now take into account that when the Government takes its CPI measurements they exclude everything above (Home prices, Education, Food)

Now take the average ounce of gold in 1970: $253

Average ounce of gold 2024: $2350

Take into account that as the debt levels grow in our economy this trend intensifies.

And the debt levels are growing exponentially.

Now think about the value of Gold in protecting your wealth over time....

UNDERSTANDING GOLD'S TRAJECTORY (and by extension the entire Hard Asset class).

 

Expensive is a psychological determination.

Stable is a psychological determination.

For the last 50 years the United States has gone through periods of relative stability and relative price gyrations.  There was the Viet Nam war and the social unrest surrounding that.  There was the massive inflation of the 1970's and the social unrest surrounding that.

The enormous difference between then and now is the United States was a Creditor Nation with the world's unchallenged reserve currency.  Households did not amass debt.  Corporatioins did not amass debt. The Government was paid for with tax receipts.  And the government was run by relatively well educated serious people who cared about solving probelms. 

Through all the unrest our House was in order.

Even the protesters realized that.  They were angry that solutions they wanted weren't being offered.  But they saw that solutions were possible.

Stable.

Now the United States is a massive debtor nation.  And most of the major central banks of the world are aggressively de-dollarizing.  Led by China, Russia, Iran - but also including Saudi Arabia and other oil producing countries in the Middle East and South America. 

Households are drowning in debt.  80 percent of the country lives paycheck to paycheck, and their kids can't afford college and will never ever be able to afford a house.  And food is too expensive.  Food is shockingly expensive.

Unstable.

And 20 percent of every dollar the Government spends is borrowed  - which means PRINTED and injected into the economy.  And the percentage increases every year.  And the more you print and the less other countries want your debt - the higher inflations soars.

Now when you have social unrest it is expressing an anger born of Hopelessness.  Solutions are not obvious.  Solutions do not even seem possible.   The problems of debt once they reach the point that the debt can never ever be realisitcally paid off - or even paid down - it simply has to be rolled over for ever - mean you have problems that have no solutions.

That can go on for an indeterminate period.  But as you print more and more money to support this unstable structure all the wealth accrues to the top few percent and the everybody else gets ground under the pityless wheels of inflation.

This is a very unstable situation.

And Gold and Hard Assets are the only assets that survive in a massively unstable society.

Right now we are at the point where gold price is just beginning to reflect the Central Bank buying  of China, Russia, India, Iran, Saudi Arabia and others preparing for a period of massive instability.  These are very old societies that remember centuries of prior instability.  It's baked into the psychology.

Here in the US we have been conditioned by 50 years of stability.  The psychology is that of a very young country that has no shared long term memory.

But psychology is strange.  It can flip.  And when it does, it tends to move in the new direction for quite a wbile.

It is just beginning to dawn on Americans that the problems we have are grinding them down in a way that doesn't present any obvious solutions.  The politicians we have now have no interest in solving or even addressing these problems.  They are far more interested in taking advantage of the social rifts that develope from the underlying problems.

All we hear here is invective against fellow citizens who have become our enemies.  That's so much easier than addressing the massive unfunded liabilities.  Or the problems of a predatory financial industry like private equity.  Or our unwillingness to allow large institutions to be responsible for their own losses.

And still many here remain hopeful.  Because we are coming off 50 years of prosperity.  Somehow things will turn around.

But every day that possibility seems more and more remote to many.

At some point Psychology flips. And people become frightened.  And Angry.  They stop spending on crap they don't need while the things they do need become ever more expensive.  And that makes them even more frightened.  And Angrier.

If you think that the last vestiges of hope are born of realistic possibility for solutions then the gold price would be a blip to be ingored.

If you think that hope is misplaced and the problems we have will get worse for quite a while before serious people come in and try to address them - then gold and hard assets will go much much higher than they are now.

Simple as that.  

AN EXCELLENT POLITICAL BACKDROP FOR GOLD

 

Right after the debates the yeild on the 10 year notes soared over 200 basis points.  Evidently the message to the bond market was that neither candidate is at all concerned with bringing down inflation.  Though gold is temporarily consolidating the movement in the long bond should be read as extremely beneficial long term for gold.

Then today July 1st, the Supreme Court handed down a decision that is should be the coffin nail for the dollar as reserve currency when they transferred all the power from the judiciary - which is in charge of settling international conract law, to the  President = who can now settle all international currency policy by fiat.  

The ten year note reacted by jumping another 100 basis points! 

Why:

This means that the President alone has final word on who to sanction, who should pay tarrifs and in what amount, and who should suffer confiscations.  He need not consult any other branch of Government as he is no longer bound by laws or conventions.

This is a tremendous development for Gold as it takes away the final support for the the dollar as an international settlement currency - or the world's reserve currency.

The dollar has already become unattractively loaded down with debt, with both candidates pledging to increase debt exponentially, 

But now the US Judicial system has now been sufficiently gutted so that the President is first, last and final arbiter of how the dollar will be used as a weapon going forwards.

Both candidates have already demonstrated their love of weaponizing the dollar.  Now they have unlimited power to do so.

This makes the dollar that much more unattractive to Global Central Banks.

Over the next few years this is the most excellent news Gold could have ever hoped for.