It’s been 3+ years since my original post and thought an update is in order.
Lots going in the world these days.
For instance precious metals are at all time highs, where gold moves are a reflection of geopolitical tensions. Silver, also considered to be a safe haven asset during difficult times, experienced a 127% YoY gain mostly due to high demand for industrial applications. Market manipulation over decades impacted mining production to a point where market demand outstrips mine production. Soon above ground supplies will run out putting bullion banks that have paper shorted the markets for decades at risk given their unsupported commitments amounting to billions of silver ounces, more than twice current annual production which is threatening to shut down the Chicago Mercantile Exchange and absorb huge losses.
The Yen Carry Trade is unwinding where the Yen is strengthening in value and interest rates rising making it difficult for Wall Street to borrow cheap money at near zero interest rates and purchasing bonds and other higher yielding investments.
The USA debt now sits at 38.7T, more than 5T higher and the government needing to refinance 9T in short order. Not going to be easy given a number of countries and many central banks have been offloading USA bonds in favour of stockpiling gold.
The stock market is at an all time high mostly due to the $580+B investments accounting for more than half of the GDP growth in the USA. Analysts are attributing this ATH to about 10 tech stocks and calling it a bubble that will pop in due time, a bubble they claim is larger than the dot com bubble.
Derivatives across the world are in the quadrillions of dollars and over leveraged.
Don’t forget the commercial real estate sector where office buildings stand partially empty. The banks holding these mortgages are sitting on their books as unrealized losses. What will their balance sheets and P/L statements look like when they are realized?
The real estate market for residential multi unit properties doesn’t look so good either. When all of those illegal immigrants entered the USA during the Biden administration and paid a handsome monthly stipend many multi family homes were built. Now that many have left, many apartments are sitting empty with landlords unable to find tenants.
I haven’t even addressed economic issues in the rest of the world which are looking pretty bleak. If government deficit spending/debt is an indicator then the USA is in good company.
So is the question when will the economy implode or as citizens will we be able to repay our government debts which in the USA as a point of reference now sits at over $355,000 per man, woman and child? Does the federal reserve have any tools to get us out of this situation?
Stay tuned.