Risk On Week

With stocks, commodities, and silver on the rise, this was a risk on week. Why then did long US Treasury rates fall (TLT rise?)? Well we know that’s because the Fed will continue to create more and more money faster and faster to push rates down in order to keep the U.S. financial system from a massive implosion under the ungodly level of debt that the Fed has thrust upon us especially since 2008 and now COVID-19. Our economy is so terminally ill that it can’t take rising interest rates ever again.

On the theory that declining long bond rates result from declining economic activity, in my Inflation/Deflation Watch (IDW), when rates decline (TLT increases) it causes my overall IDW to decline. But because the real reason rates are declining is because the Fed is pumping money into the system, I decided to see what my IDW would look like if I took TLT out of the IDW. You see the result from the chart above. The IDW is now at an all-time high. For sure there are massive deflationary forces in play, but as Alasdair Macleod has pointed out on more than one occasion on my radio show, March 23 was the date when you need no longer worry about deflation in the Inflation/Deflation tug of war because the Fed let it be known Modern Monetary Theory will now be used full throttle. This is indeed a frightening concept when combined with the political and COVID-19 mask-wearing, depression-forcing lockdown insanity the elites are forcing on the American people.

The practical implications of this view, if you accept it, are that precious metals and commodities will continue to thrive not because of industrial demand given the fact that we are at the start of a global depression, but simply because the dollar and other fiat currencies are in the process of being diluted out of existence. How many countless trillions of dollars will it take to cause the dollar to be worthless? That depends to a great extent on psychology. But once the average person realizes what smart hedge fund managers like Ray Dalio have understood early, there will be a rush for the exits for something tangible. And the most logical place to go will be to silver coins, and perhaps even copper pennies to the extent they are available. Michael Oliver’s work is pointing toward a massive rise in the entire commodity complex, which makes sense, as funds with big money will simply seek to protect their wealth by buying tangibles. 

Regarding the upcoming election, it’s not too early to start thinking about how a Harris Presidency will impact the investments covered in this letter. For starters, it is my understanding that AOC has requested to head up the EPA. What AOC wants she apparently gets in the Democrat party. She has vowed to crush the energy and resource business in general. A Biden victory will likely result in an exit from companies with gold and silver mining projects in the U.S.  The Obama goal was to take the U.S. down and bring third-world countries up to our level. It is my strongly held belief that a Biden/Harris administration would quicken that process dramatically. I should perhaps very soon outline the companies on my list with projects in the U.S.  When Trump became President, he immediately cut regulatory tyranny, which cut the waiting time to gain permits in Nevada dramatically. If AOC heads up the EPA, at best we will return to Obama-level restrictions.

About Jay Taylor

Jay Taylor is editor of J Taylor's Gold, Energy & Tech Stocks newsletter. His interest in the role gold has played in U.S. monetary history led him to research gold and into analyzing and investing in junior gold shares. Currently he also hosts his own one-hour weekly radio show Turning Hard Times Into Good Times,” which features high profile guests who discuss leading economic issues of our day. The show also discusses investment opportunities primarily in the precious metals mining sector. He has been a guest on CNBC, Fox, Bloomberg and BNN and many mining conferences.