Market Updates

"Don't look it in the mouth". That's what they say about a gift horse, meaning that you just take it and move along, and right now, I'm pretty sure that if you look up the definition of "gift horse" in the dictionary, you'll find a picture of silver right beside it. From silver's recent highs of, call it, $28, to recent lows of, call it, $23.25, we're talking about a decline of almost 17%. If we really want to get technical about it, from silver's recent intra-day spike high of $29.915 to its current (today's actually) intra-day spike low of $23.22 (so far), we're talking about a decline of over 22%, which, if we want to use Wall Street jargon, means that silver is now technically in a bear market.

And you all are failing at both of those charges here in the year 2020.

Since the US Congress essentially had a coup with the passing of the Federal Reserve Act on December 23rd, 1913.

The sovereign Constitutional stores of the value of our nation (gold and silver), have gained tremendous value over the last 107 or so years versus inferior currencies designed to lose value over the long haul.

There are two types of policies that have direct and indirect impacts on the economy and the markets, the first being "fiscal" policy, as in, the government's financial policy, and the second being "monetary" policy, as in, the central bank's financial policy.

On the Federal government's fiscal side of things, we've had legislation like the CARES Act, which brought about a whole range of fresh government spending, including PPP loans to businesses and Economic Impact Payments to individuals and families.

We continue to await a coming wall of bankruptcies and write-downs still unfolding from the viral economic lockdowns and ongoing tepid consumer spending response. 

Collapsing commercial real estate cash flows could implode the derivative markets. Too increasing record debt levels amongst governments, corporates, and consumers essentially guarantee a coming alignment where all three need even more ∞QE support—leading to higher inflation rates—leading to more fiat currencies all bleeding in value versus silver bullion, gold bullion further.

The past week may have included a long holiday weekend, which some people lazily spent leisurely grilling in their backyards, but the holiday-shortened past week in the markets has been the exact opposite for market participants, if not totally downright frightening.

The Nasdaq, for example, hit a fresh all-time record high just last Wednesday, and the very next day began plunging, falling by over 10% in the last three trading days. The S&P plunged too, but peak-to-trough, we're talking about a drop of just over 7%, and the Dow is down just over 5% after breaching 29,000 to the upside for the first time ever.

What has happened over the last week that has caused such a plunge, and how do we know if the plunge is over or if it will continue?

In my opinion, there were two main drivers of the most recent stock market plunge, and in no particular order, those two drivers would be the Covid-19 vaccine disappointment and the fiscal stimulus stalemate.

Herd instinct in finance, or in human behavior in general, is a phenomenon where people follow what they perceive other people are doing.

Rather than fully rely on their own judgments or analysis. People who exhibit herding instincts will gravitate toward the same or similar investments based almost solely on the fact that many others are supposedly doing the same thing.

It sure seems like everyone is waiting on the next bail-out, the fourth round of the CARES Act.

This anticipation has been steadily building too, and it's beginning to become quite loud in the financial press. For example, recall that not even two weeks ago, American Airlines said it would be cutting tens of thousands of jobs, some 19,000 of them involuntarily, in October, which is now less than a month away, if the airline company didn't receive another government bail-out. But it's not just individual companies or industries that need a bail-out, for it appears to be broad-based and all-encompassing across the entirety of the US economy, and the need is not just in regards to private companies but also to governments and agencies.

After we get through some of the Federal Reserves’ faith-based talking points, we will have a significant update on COMEX fractional reserved gold and silver markets to close.

Now back to Chair Powell addressing the last time the fiat Federal Reserve Note got knocked out by an exponential gold spot price in late Jan 1980, now over 40 years ago.

The correction in gold & silver continues.

The correction has been shallow in terms of price declines, given the spectacular rally, and the correction has been orderly thus far in terms of apparent support at $1900 for gold and $26 for silver. Currently, three fundamental factors are weighing slightly gold & silver, and one of them is not the US dollar, although the dollar deserves an honorable mention.

The scale and speed of change that the world is now undergoing is nearly impossible to fully comprehend.

The viral crisis, seemingly endless economic lockdowns, and select infinite bailout programs are ushering in the fastest and largest consolidation in our economic history. The long term ramifications of changes afoot are yet to be fully understood, and they will surely mark a sea change in our collective history.