Coronavirus Trigger?

This week was a clear-cut risk off week with both stocks and commodities down significantly while Treasuries and gold gained. Friday, January 31, saw that all the major U.S. equity indexes lost big with the Dow, down 603.41 (2.09%), losing the most. Silver, which derives its value as both an industrial and monetary metal, dropped 0.5% during the week. 

It seems to me the Coronavirus may actually be the natural force that may finally tell the self-proclaimed monetary gods that they are actually not in charge. I asked Bob Moriarty if he thought the Coronavirus might be the unhappy trigger that finally caused humankind to start reflecting on reality, at least in the financial markets if not in the American political realm. Here is what he told me:

With regard to putting 30 to 60 million people under quarantine, I said a week ago that I can’t see how it cannot burst all the financial bubbles. China is lying through its teeth about the number of victims. 

Then I asked him if the virus was leaked out of a lab. He said, “Of course. It is identical to a virus the Chinese Military mapped two years ago. It is not a chance that it was released at exactly the worst possible time. At Chinese New Year, 800 million people are traveling. The Coronavirus coming out of Wuhan is going to pop the ‘Everything Bubble.’ It would be wrong to think of it as a minor pinprick. With somewhere between 35 and 50 million people in China already under quarantine in a dozen cities it would be a lot more like a thermonuclear blast that will flatten every bubble in sight. In all of recorded history no nation has ever managed an effective quarantine on so many people. With transportation screeching to a halt, the lives of millions of those people are at risk due to a simple lack of food or warm shelter.

In the meantime, my IDW fell 1.53% last week to 159.14. That’s below the initial top of 159.87 on April 28, 2011. But think about this. Despite all the trillions of dollars that have been created out of thin air since that initial top was hit in 2011, the highest top that has been created since then was 166.08 on January 26, 2018. I’m sorry to say that this looks like our system is near the end of a gigantic topping process and, much like an aircraft running out of fuel, it’s destined to crash. The Fed and other central banks can pump as furiously as they like but it will be futile because the tank is empty. Something has to give and in my view that will ultimately be fiat money. For the sake of restoring confidence, an asset-based money will need to be reinstalled and that seems to be exactly what China, Russia, and other adversaries to the Anglo-American Empire have been preparing for. This may be the best of times for gold investments but the worst of times for those unprepared. Being low on cash personally, this week I made no trades. In the following pages I commented on Novo Resources, Klondike Gold, Aurania Resources, Gatling Explorations, Great Bear, Benchmark Metals, and Crystal Lake. So long until next weekend.

About Jay Taylor