There is every indication that the time when all is rendered into ashes is rapidly approaching. People with fiat, earning fiat, relying on fiat will be impoverished. A currency collapse with no foreign currency to escape into is a cataclysmic event, the like of which we haven’t seen before, not even in Roman times. If it doesn’t buy you food and warmth a million bucks is worthless.
-- Alisdair Macleod, The Global Reset Scam, GoldMoney.com
It's always about money. Every time. Whether it's politics or medicine or sports or any other human endeavor, it always comes down to a matter of money: who's got it, who wants it, who's holding onto it, who's picking it up.
Nothing in the world - at least at this point in time - happens without money, which is why it's becoming incumbent upon everybody - from the lowest beggar to the highest oligarch - to determine which form of money is the right one to hold, the right one with which to transact, the right one to hoard for future use.
Fiat, the yen, euro, dollar, pound, yuan are all dying, albeit a slow death. Fiat currencies backed by nothing more than empty government promises remain dominant. They're completely useful in terms of everyday living, transactions of all manner, for just about anything and everything. That is unlikely to change in the near term.
While these currencies all are collectively being debased by their respective governments and central banks, their purchasing power continues to erode, though one wouldn't be aware of that watching the Forex pairs like $US-Yen, Euro-Pound, Euro-$US, et cetera. They all go up and down against each other, weakening and strengthening on rumor, suspicion, innuendo, sometimes even facts. At the end of the day, however, they'll all buy less than they did did day before, month before, year before. It takes decades to clearly see the debasing of currencies in terms of inflation, but its been ongoing for at least a century, since the creation of the US Federal Reserve in 1913, and probably before that.
And the inflation continues to advance. What one could buy with one dollar in 1940 cannot be had with $20 today.
In 1940 a gallon of gas was 11 cents. In 1940 the average cost of new car was $850. Today, the national average price for a gallon of gas is $2.11, a new car is close to $40,000. It only took 80 years for the purchasing power of the US dollar to decline by roughly 95%. Obviously, fiat money, based on a system of fractional reserve banking reliant on endless debt issuance isn't working for everybody. The top 0.1% of Americans has more accumulated wealth than the bottom 80%. It's working for them, not for nearly everybody else.
When a currency stops being an effective means of preserving wealth for huge swaths of people - at which the fiat currencies have failed miserably - poverty ensues. Lines of cars miles long are now typical at food banks across the country. The mainstream media - reliable purveyors of truth that they are - won't show the poverty and even if they do, they'll blame it on the coronavirus, and eventually on President Trump. That's just how they roll.
The matter of fact is that the US middle class has been strip-mined and hollowed out, plunging millions of people into poverty or week-to-week, even day-to-day scratching out of an existence. They're turning to begging, barter, selling off what few assets they may have, prostitution, crime. By whatever means available, they all need to eat.
Not to belabor the point, but homelessness would be rising even more rapidly than it already is without mandated eviction moratoria and foreclosure forbearance rules imposed by states and the federal government during the "pandemic," many of which are expiring soon. US household debt reached an all-time high in the third quarter, $14.35 trillion. Nearly $10 trillion of that is in mortgages, with new and existing home prices at record highs and interest rates near record lows. Sustainable? Probably not.
When a currency implodes, the usual characteristics are runaway inflation caused by easy money policies, joblessness, credit defaults, bankruptcies, evictions, small business failures, boarded up storefronts, homelessness, general poverty. Sound familiar? We are there.
If all of these problems are the end result of a currency that works to enrich the few at the expense of the many, what do ordinary people do?
Here are a few options: protest, riot, burn, loot, fight, commit crimes, starve, die. Lovely.
For the rest of us lucky enough to have some means to continue making a living or having enough cash and/or liquid assets to survive reasonably well, he time to start looking for alternative currencies was yesterday, last month, last year, last decade, last century. We should have known we were doomed when Nixon closed the gold window in 1971, but most of us weren't economists nearly 50 years ago. Those of us who were even adults at the time were in our teens, 20s and 30s. We were more concerned about making the scene at the newest disco, making headway at work, finding a mate, raising a family. Now we're mostly retired, watching our world collapse right before our eyes.
For the bulk of people born after 1965, the economy of the past 50 years is all they know. They're largely unprepared for what's happening and what's to come. Some of the millennials get it. Generation Z gets it. They don't hold out much hope for the future. Many have turned to Bitcoin while old-timers have turned to gold, silver, and real estate.
As far as land is concerned, it's not the most liquid of assets, but it does serve the purpose of having stability, a place to live, a place from which to run a business. Beyond that, it's sunk money, a long-term necessity.
Gold, silver, and Bitcoin are going to win out over any government issued currency, be it fiat US dollars from the Federal Reserve or a new currency that's 100% digital, or in central banker lingo, CBDC (Central Bank Digital Currency), which is all the rage in the conference rooms frequented by these preposterous imposters of monetary witchcraft.
Years ago, after the sub-prime crisis of 2007-09 nearly bankrupted all the major banks and destroyed the global economy (it did, it's just been papered over since then), Money Daily posited that the next crisis would be more destructive by degrees and likely the last crisis. We are there. It's just taking longer than anyone expected.
When the US dollar goes poof for good, it's going to be bad for hundreds of millions, if not billions, of people, because, as the quote at the top of this article says, "If it doesn’t buy you food and warmth a million bucks is worthless."
*****
Stocks split the difference for the week, the Dow and S&P, after reaching all-time highs, quickly retreated, ending the week on the downside. The NASDAQ and NYSE Composite managed gains. Everything was minimized, amounting to nothing. Everybody's waiting for some resolution to the presidential situation, dealing with COVID-related nonsense, thinking about Thanksgiving or not caring about anything.
Wall Street types continue to be focused on pushing equity prices higher and they've done a swell job in 2020, considering the multiple challenges they faced. Maybe it's time for them to sell, or to tell other people to sell. Maybe not.
Bonds are signaling that all is not well with the system. The 10-year and 30-year treasury yields remain stubbornly high, as they have been now for the past five weeks. Money flowed back into the safety of fixed income over the past week, pushing yields down. The 10-year note dropped six pasis points, from 0.89 to 0.83%, while the 30-year dropped 12, falling from 1.65 to 1.53%. While not indicative of a trend (yet), investors are looking to lock in longer yields that are essentially losing bets with real negative yields as inflation is running at least at two to three percent.
Bond sleuths surmise that it's better to lose a percent or two or three to inflation than 10 to 20 percent in equities. At least with heavy exposure to long-dated maturities, the pain will be somewhat less than that of peers in stocks. While the longest-dated bond yields have taken off, the shorter end of the treasury curve remains flat. Everything prior to a five-year maturity is essentially trading at the zero-bound.
What's spooking the bond market has probably more to do with equity valuations than politics or medical issues. Even the announcement of two COVID vaccines coming to the rescue shortly has not apparently sufficiently allayed fears to any significant extent. With forecasts of holiday retail spending looking pallid and stocks at stretched prices one can hardly blame money managers for seeking shelter. Unemployment, productivity, and industrial production data seems to be pointing more to a prolonged recession rather than a quick, one-off, V-shaped recovery.
Oil prices ended the week at a two-month high ($42.42), putting in a solid gain of over two dollars a barrel from the previous Friday price of $40.13.
Precious metals are just so obviously manipulated by a consortium of banks and dealers at the LBMA and at the futures trading hub, COMEX, it's hard to to laugh, or cry, or puke out one's guts.
Gold ended the week at 1,872.40, down $12.80 from the prior Friday. Silver fell from $24.77 to finish the week at $24.36. The "consolidation" (see spoofing, cheating, naked shorting) in the precious metals over the past two months is nothing short of criminal, as traders at JP Morgan can attest.
The most recent prices for common gold and silver items sold on eBay (numismatics excluded, shipping (often free) included) are shown below:
Item: Low / High / Average / Median
1 oz silver coin: 32.50 / 55.00 / 39.77 / 36.75
1 oz silver bar: 29.05 / 43.30 / 33.54 / 33.02
1 oz gold coin: 1,890.00 / 2,054.25 / 1,979.26 / 1,984.13
1 oz gold bar: 1,915.00 / 1,990.59 / 1,969.30 / 1,975.25
In the eBay sampling, the presence of more and more numismatics - especially in silver and gold coins - has been prevalent for the past four weeks, while premiums remain high. Sellers are getting extremely good prices on numismatic (proof, high grade, low mintage) coins and bars while prices have declined overall, the desired effect of the controlling hands in the futures and spot markets.
Anecdotally, a good number of gold-focused internet reporting sites mention increased buying of bulk gold tonnage by central banks. Speculation is that banks are bolstering their gold reserves in anticipation of an economic event that will change the financial order significantly. Otherwise, nothing out of the ordinary in precious metals. Banks continue to pressure price lower while small, independent buyer demand has skyrocketed, a trend effective over the past nine months and counting.
Finally, Bitcoin continues to march toward all-time levels in price. The price, in US$, of one Bitcoin reached a high of $18,980.00 on November 20 and has retreated from there. As of this writing, the price in US$ is $17968.81. Wild swings in price are nothing new to Bitcoiners. A year ago, the price was $7283.19, a month ago, $12,988.20.
What to make of the recent rise in Bitcoin and other cryptocurrencies? The global dominance of fiat currencies has nearly run its course and alternatives are being sought. The rise of Bitcoin is not by chance. It is fast approaching its all-time high, measured in US$ of $19,891.99 from December 16, 2017. Advocates for the original cryptocurrency believe that further adoption by the general public and widespread use as a means of exchange are within reach, probably two to five years out.
Bitcoin's price is determined by demand, which is increasing. Of 22 million Bitcoins total, 18.6 million have been mined, making the supply now somewhat stable. Bitcoin's market cap of $335.8 billion remains minuscule by comparison to fiat currencies, though it is approaching silver's. Price appreciation is expected as long as central banks continue debasing fiat. The process will likely take longer than most people have the patience for, but holders of alternatives will eventually be winners. All unbacked, fiat currencies have met the same fate - every one - of eventually returning to their intrinsic value of zero.
At the Close, Friday, November 20, 2020:
Dow: 29,263.48, -219.75 (-0.75%)
NASDAQ: 11,854.97, -49.74 (-0.42%)
S&P 500: 3,557.54, -24.33 (-0.68%)
NYSE: 13,827.00, -36.23 (-0.26%)
For the Week:
Dow: -216.33 (-0.73%)
NASDAQ: +25.69 (+0.22%)
S&P 500: -27.61 (0.77%)
NYSE: +65.68 (+0.48%)
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