During the pandemic the population in the USA was subjected to the claim to “Follow the Science”. The sad part is in the government’s push for everyone to get vaccinated, they did not follow the science. The vaccines were not tested at first to stop the spread. Yet, they made claims that it did. The vaccines were said would prevent infection and yet even the vaccinated continued to get infected. Now, it is said only to reduce the severity of said infections. The point is humans are easily manipulated to believe propaganda for the most part as we can clearly see from our current reaction through fear induced obedience.
Science is truly the study of nature through testing and verification. This is where we get our facts about the world which become our beliefs and theories which are: a plausible general principle or body of principles to explain a phenomenon. “Global Warming” is one such theory, that because of its failure to put enough fear in people to follow its believer’s directives, was then remarketed as “Climate Change”. There still exist those that have other theories that are plausible. However, since this has now become a religion run by powerful businesses to change the political landscape, any descent is apostasy and you will be mocked and marginalized even if your work is clear, understandable and credible.
These two statements lay the groundwork for recent observations regarding our economy. As I had observed in my prior post on April 20, a statement from Morgan Stanley’s CEO that the banking crisis was over was in fact just a subterfuge to hide that there were more problems to come. I was proven correct when the news came out that First Republic would be the next bank collapse and had to be taken over by JP Morgan on May 1. Now there seems to be a plethora of pundits espousing the view that the banking crisis is not over and there is more to come.
Of course, this will make it very difficult for people to know where to place their investments, especially those that are supposed to be set aside for retirement.
Then we have the Debt Ceiling argument in the USA. The president claims that Congress should not stand in the way of the will of the people. Interestingly, Congress is supposed to be the representatives of the people. Yet, it appears that there may be some traction forward, this still has the world concerned as to what is the value of US debt. For many, this is a repeat and pretty much most people deign to ignore this circus.
Still debt is what this country runs on and the US Dollar, the current global reserve currency, draws its value from its economic and political position as a world leader.
This is why concern for the future of the US dollar as the reserve currency has been a topic of late. The freezing of Russian US denominated assets has spooked other countries who are now looking at ways to avert US government control. Countries are using their own currencies as part of their reserve and others are just avoiding working with the US dollar.
This brings to forefront recent quotes from Warren Buffet at Berkshire Hathaway’s annual meeting:
“It’s easy for America to do a lot, but if we do too much it’s very hard to see how you recover once you’ve let the genie out of the bottle. People lose faith in the currency, and they behave in an entirely different manner than they do when they feel … they’re going to have something with roughly equal purchasing power. It changes the economy.”
“Nobody knows how far you can go with a paper currency before it gets out of control, and particularly if you’re the world’s reserve currency. You don’t want to try and pick out the point where it does become a problem because then it’s all over.”
“Forget about all the toys – it’s a joke to think of any tokens, that’s madness,” when it comes to the reserve currency of the world. But it’s also madness to just keep printing money.”
These quotes are in response to questions posed to him which still clearly spell out a concern. The Oracle of Omaha, who has been a very successful investor and businessman, who is almost worshipped by his fans has revealed he does not have the answer, and in essence knows that a correction is coming. At least that is my interpretation of these statements. It is difficult for him to accept a possible change of the modus operandi of the current economic environment. Mr. Buffet plays the long game, but at his lively age of 92, he may not be around to see the cataclysmic change which I personally believe is coming.
As someone dear to me, who escaped from the communist regime in Cuba always reminds me. People have to play by the rules of the game they are in to survive and at the same time look forward to a solution. In our case, the solution is to take a defensive approach to a threat to our personal economic security.
If there is a concern of change of our economic environment, whether it be the end of the US dollar as a reserve currency, an avalanche of more bankruptcies or a grave recession to come, a person needs to be prepared. This is why the market is seeing tremendous growth in investment demand for gold, silver and Bitcoin. It is a hedge away from unknowns, but also just a few of the hard assets available to defend your own personal assets.
Meanwhile, one hard asset that has found a greater fan base is platinum. The lack of reliable power grid in the country of South Africa and problems processing stock are two factors that will continue to underpin support for the metal per the Heraeus Precious Appraisal of May 8. Expectations of persistent growth in demand from auto, hydrogen energy and electronics industries combined with expectations of annual decline in production will keep this metal as a nice option for diversification.
The rest of the platinum group complex is holding and trading a bit higher than in recent weeks. It is believed that this is mostly on supply concerns. The minor PGMs (Ru & IR) particularly are subject to big moves when supply is constrained.