I Mean… It’s Capitulation Time
Zero interest rates; don’t ever forget that for over a decade, the cost of credit was virtually free.
What the Trump administration was able to do, since it campaigned on restoring jobs to America and putting the worker first, was to end the free trade/open border/capitalism-for-all era, which was long overdue and probably served its purpose in the mid-1990s, after the Soviet Union fell.
Instead, the U.S., by favoring cheap appliances over job security and national security, gave corporations the incentive to build industry elsewhere (in China, mostly) and, with miraculous speed, gave birth to a worthy adversary, which had no prayer to rise in power, without the help of the craziest trade policy ever devised!
The Biden administration has not only kept all of the Trump-era tariffs, but has doubled-down on nationalism and domestic industrial build-up. This has a massive price tag of inflation and war attached to it, but comes with the reward of weakening China to the brink of its collapse.
Investors have been left confused by the end of globalization, and they see central banks shrinking their balance sheets at record pace, while governments are spending on defense and infrastructure – more than at any time during the past 80 years!
That’s why even with interest rates at 15-yr highs, investors are still not buying them!
Dramatically higher yields and the radically shrinking global dollar supply have sent gold nosediving, and silver right along with it. There could be one more colossal flush, as traders completely let go of silver, if the consensus continues to be higher-for-longer.
I think that it’s hard to consider any current prediction as accurate, when there is clearly a major anomaly in the consumer economy…
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Either unemployment begins to rise, because prices are too high and companies must right-size even more, or consumers are about to spend far less, because they’ve been splurging in an unsustainable way!
Either way, previous times at which these two lines were this high and this low mark major turning points, and we believe this time is no different.
Whatever is going on in the markets at present is totally without precedent, and that’s why we think that we’re hitting an extreme, just as the Federal Reserve wrote a $100bn loss on its bond portfolio!
Seriously, have you ever seen something like this?
This is a testament to how late the FED was to recognize that inflation was coming…
They simply had no clue that inflation would erupt so suddenly and furiously, and that mistake cost them $100bn!
As they continue to make the world wait until they have enough data to support the victory over inflation, businesses are suffering.
Silver is an interesting metal, though…
Correlation between silver and oil is simply uncanny; in the 1970s, when oil soared, silver did as well. In the 2000s, when oil rallied, silver did as well.
Oil is now in a strong bull market, and what we believe is happening is the last big sell-off in silver, after which it will stage a truly generational rally that will shock the markets.
It might go under $20, but then it’s going to $40 and higher, if oil continues climbing…
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