Economic Collapse, Overvalued Stocks And The Stealth Bull Market In Gold

The narrative that the economy continues to improve is a myth, if not intentional mendacious propaganda. The economy can’t possibly improve with the average household living from paycheck to paycheck while trying to service hopeless levels of debt. In fact, the economy will continue to deteriorate from the perspective of every household below the top 1% in terms of income and wealth. The average price of gasoline has risen close to 50% over the last year (it cost me $48 to fill my tank today vs about $32 a year ago). For most households, the tax cut “windfall” will be largely absorbed by the increasing cost to fill the gas tank, which is going to continue rising. The highly promoted economic boost from the tax cuts will, instead, end up as a transfer payment to oil companies.

The rising cost of gasoline will offset, if not more than offset, the tax benefit for the average household from the Trump tax cut. But rising fuel costs will affect the cost structure of the entire economy. Furthermore, unless businesses can successfully pass-thru higher costs connected to high the er fuel costs, corporate earnings will take an unexpected hit. Rising energy costs will hit AMZN especially hard, as 25% of its cost structure is the cost of fulfillment (it’s probably higher because GAAP accounting enables AMZN to bury some of the cost in the inventory account, which then becomes part of “cost of sales”).

Gold is holding up well vs. the dollar. The dollar is at its highest since mid-November and the price of gold is trading 2% higher than it was at in November. Also, don’t overlook that the Fed began its snail-paced interest rate hike cycle at the end of 2015. Gold hit $1030 when the Fed began to tighten monetary policy. I thought gold was supposed to trade inversely with interest rates (note sarcasm). Gold is up nearly 30% since the Fed began nudging rates higher. Despite that it might currently “feel” like the price of gold is going nowhere, beneath the surface gold (and silver) have been staging a very powerful bull market pattern.

Kerry Lutz invited me onto his Financial Survival Network Podcast to discuss these issues and more. We have a good time catching up on a diverse number of topics – Click on the link below to listen or download:

Visit these links to learn more about the Investment Research Dynamic’s Mining Stock Journal and Short Seller’s Journal.

5 thoughts on “Economic Collapse, Overvalued Stocks And The Stealth Bull Market In Gold

  1. I enjoyed the interview but I have to say there is no shortage of high tech workers. That’s just the excuse that companies use to hire Indian indentured servants on guest visas instead of paying Americans more. There have been far more science, business, technology, math, and statistics graduates since 2000 than the number of jobs.
    The National Science Foundation tracks the number of graduates in most majors.
    https://www.nsf.gov/statistics/2015/nsf15326/#chp2
    Since 2000, over 40 million people got college degrees. Of those, there have been roughly 14 million graduates in science, engineering, math, and computer science. That’s far more than the number of jobs in these majors that were added since 2000, according to the BLS.
    The BLS’ B-1 historical data shows only 17 million jobs since that point, most of them in low paying domestic services.
    I work in IT and have not seen my wages go up in at least a decade on a nominal basis. Companies where I have interviewed spend weeks or even months interviewing candidates before they make a decision. That tells me there is a vast surplus of labor.

  2. Hi Dave,

    Have you ever considered that Amazon and Tesla could be Government sponsored companies.

    Tesla could be used to trickle out Space age or back engineered technology, and Amazon to control distribution eventually . And the supposed friction between Trump and Bezo’s is just a Dog and Pony show.

    1. Well, I recommended AXDDF to to my subscribers my subscribers at 27 cents in the April 14, 2016 issue of my Mining Stock Journal. The stock since then
      traded as high as $1.40. By the laws of mathematics, that’s a 5.18 bagger. The stock closed at $1.05 the day before it split into two separate stocks.
      The new stock AAMMF + AXDDF combined close today at $1.07. Any subscriber who bought just $1000 shares and held thru today has made enough to pay for
      4.5 years of their subscription to the Mining Stock Journal.

      A $2700 investment when I recommended it is now worth $10,700. What would I do now? I suppose I’ll put my current view in the next issue of the Mining Stock Journal. Funny thing: AXDDF is only the 3rd or 4th best performing stock that I’ve recommended over the last 2 year.

      Hope that answers your inquiry.

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