On the road again, so just some random thoughts this week.
Let’s Work Backwards
Let’s focus on the USD for just a moment.
It may be done barfing mid term, and possibly long term.
Fitch downgraded the United States this past week, then Moody’s piled on and did the same.
Anyone out there care to guess what happened last time they did this?
Investment in the US went nuts to the upside.
And there are so many reasons for people and sovereign nations to flock to the USD right now and in the future.
Powell raised rates, and may do it again later!
Contrast this with the G7 nations, who are slowing down, or who have already paused with their rates.
And the bear cases for the overall economy are becoming more widely known.
Consumer debt in several metrics have hit all-time highs (yes, they can still go higher), making a credit crisis eminent.
We spoke of the energy crisis last week on the podcast. The food crisis will likely spawn from this and all that has happened in the last 18 months.
People can simply park their money in US treasury bonds, the safest bonds in the world still, and get over a 5% return for months and months as they prepare for the storm.
I’ll bet a lot of people are waiting for these rates to top out (so they’re waiting for the pause like I am), before they buy these bonds and bunker in for the rapture.
Everyone at the Fed, Yellen, and mainstream financial media are out of nowhere talking about a “soft landing”, or even “no landing”.
Why? Because of a few AI stocks? We’re all saved now? All of the fuck-ups we’ve made in the last 5 years aren’t going to factor in anymore?
No, because what are they supposed to say? “Run for your lives!!!!”
This would crash the market overnight.
Equities have sold off this week, possibly as a precursor of what’s to come, but price moves in waves, so we’ll see.
I continue to buy nothing and stack cash, and almost all of it is USD.
But I’m keeping as eye on silver.
Silver has pulled back this month, as expected, but the reason given was a bit unexpected, although maybe not surprising.
Fast forward to 2:40 for the reason. And watch the rest if you like porning out on precious metals like I do.
There were other headwinds though.
Demand for silver has been dropping hard. Just look at the premiums.
COMEX and the LME are now adding more than what’s being taken out. This has gone on for weeks.
India is not buying, at all. This is big. Indians are very shrewd buyers, they do not like these higher prices, and there is no sign of them returning yet at these current prices.
Might this be the last dip before the big run begins?
I have no idea, but I’m treating it like it may be, and eyeing a few buying opportunities in physical silver and adding onto silver mining stock positions.
I think we have further to go down in the XAG/USD, but I will obey my charts like I always do.