Still Waiting On Silver

Below is a chart (source) of SLV prices for the past week:

Silver prices gapped significantly lower at the open on both Thursday and Friday. The combined loss for the two days is almost six percent.

It’s true that two days price action doesn’t tell the whole story, but contrary to what usually happens in fairy tales, this story isn’t likely to end in similar fashion. The phrase “happily ever after” does not apply.

Nor can it be said with any conviction that there is a positive side to silver’s recent price action. No matter how optimistic silver investors are, false hopes are still “false”.

Below is a two-year chart of SLV:

While it is not drawn on the chart, there is an uptrend line of support which dates back to March 2020 and which was decisively broken earlier this summer in June. At that time, silver prices gapped down sharply, too; and again in August.

At this point silver prices are down more than 25 percent from their highs last August and appear to be headed lower. It isn’t unreasonable to expect SLV to land somewhere around $18 and spot silver at $19-19.25 – at least temporarily.

IS SILVER REALLY CHEAP?

In May 2021, I published an article titled “Are Silver Prices Really Cheap; And Does It Matter?” At the time, spot silver prices were approximately $27 oz.

The February Reddit false alarm was in the rear view mirror, and the silver price seemed to be consolidating at about ten percent below its high from last August which was in the vicinity of $30 oz…

“On an inflation-adjusted basis, most of the price history for silver is still under $20 oz. Even on an inflation-adjusted basis, silver is still more expensive than almost any other time in the past one hundred years.”

Silver back below $20 oz. is like returning home after a fun vacation. Familiar territory, but not much to get excited about.

Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED!

It’s Not Biden’s Inflation

The supposition, however, is incorrect. No amount of government spending causes inflation.

It is also true that abnormally higher spending by consumers does not cause inflation.

Most people think that the term ‘inflation’ is synonymous with ‘higher prices’.

The rising prices, however, are not inflation. Inflation has already been created.

DEFINITION OF INFLATION

“Inflation is the debasement of money by governments and central banks.“

Inflation is accomplished by expansion of the supply of money and credit. All governments and central banks inflate and destroy their own currencies intentionally.

The inflation leads to a loss in purchasing power of the currency which in turn shows up in the form of increases in prices for most goods and services.

Inflation is not created, or caused, by companies raising prices. It is not triggered by escalating wage demand, hoarding or supply shortages.

Changes in economic demand, hoarding, and bottlenecks in the supply chain for goods and services have nothing to do with inflation.

When someone says “inflation is back”, they are referring to rising prices. They are wrong on two counts.

First, the portion of rising prices resulting from the loss in purchasing power are the effects of inflation.

The current share of rising prices resulting from changes in economic demand, such as supply chain bottlenecks, pent-up demand, etc. have nothing to do with inflation or its effects and are a totally separate factor in price changes for various goods and services.

Second, the inflation isn’t back; because it never went away.

Inflation is an ongoing cancer for all currencies of the world and its effects are unpredictable. Governments and central banks never stop expanding the supply of money and credit.

This means, of course, that all currencies continue to lose purchasing power. The US dollar today is worth one penny compared to its purchasing power of a century ago.

ROLE OF THE FEDERAL RESERVE

The Federal Reserve is a banker’s bank. Its purpose is to create and maintain a financial system that allow banks to lend money in perpetuity.

We are bombarded daily with commentary and analysis regarding the Fed and their actions. We are treated to continual rehashing of the same topics – tapering, interest rates, inflation – over and over.

Fed actions, especially including the inflation that they create, are damaging and destructive. Their purpose is not aligned with ours and never will be.

Today the Fed is restricted by necessity to a policy of containment and reaction regarding the negative, implosive effects of their own making. (see The Federal Reserve – Purpose And Motivation)

THE FED IS THE PROBLEM

One of the self-proclaimed objectives of the Federal Reserve is to manage the stages of the economic cycle so as to 1) avoid recessions and depressions and 2) extend the prosperity phase of the cycle.

How well have they done? Not very well.

In their initial attempt to avoid and defer the natural corrections associated with economic recession, the Fed ushered in the most severe depression in our country’s history beginning with the stock market crash in 1929. Even former Fed chairman, Ben S. Bernanke agrees:

“Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.”…Remarks by Governor Ben S. Bernanke (At the Conference to Honor Milton Friedman, University of Chicago -Chicago, Illinois November 8, 2002)

But they did do it again.

Six years after his speech, Governor Bernanke presided over another catastrophe in the financial markets. Cheap credit and ‘monopoly’ money had blown bubbles in the debt markets that popped.

Alan Greenspan was Chairman of the Federal Reserve at the time Bernanke made the above statement. When testifying before Congress after the credit implosion of 2007-08 and after he had been replaced by Mr. Bernanke, Greenspan had this to say:

“I discovered a flaw in the model that I perceived is the critical functioning structure that defines how the world works. I had been going for 40 years with considerable evidence that it was working exceptionally well.”

And lets not forget the Fed induced bubble surrounding stocks in the late nineties which was pricked in early 2000. Greenspan was at the helm then, too.

But is this really any wonder? What can you expect after reading what Danielle DiMartino Booth says…

“The economists were satisfied parsing backward-looking data to predict future events using their mathematical models. Financial data in real time were useless to them until it had been “seasonally adjusted,” codified, and extruded into charts. Fed employees had no interest in financial news.”

IT WILL BE MUCH WORSE NEXT TIME

Similar events today would bring about a price collapse in all markets as well as usher in deflation and a full-scale depression. All of this would be resisted on every front by government and the Federal Reserve.

They would launch an all-out financial war (and maybe another real war, too) by opening the money and credit spigots full force in a futile attempt to reverse the credit implosion and negative price action of all assets.

The depression would also last much longer than needed. And the price declines which are necessary to correct the excesses of the past and cleanse the system would be countered every step of the way by regulations and programs of dubious value.

The efforts of government would actually worsen things and prolong the suffering; and the results would be much worse than anything we could imagine.

Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED!

Everything Peaked in 1980 – The Waning Effects Of Inflation

Gold Prices (inflation-adjusted) – 100 Year Historical Chart

historical-gold-prices-100-year-chart-2021-08-09-macrotrends

Crude Oil Prices (inflation-adjusted) – 70 Year Historical Chart

crude-oil-price-history-chart-2021-08-09-macrotrends

Given their unique characteristics and uses, their price patterns are amazingly similar; which is interesting, but not indicative of any correlation.

What is important is that the price of gold today ($1730 oz.), in inflation-adjusted terms, is twenty-five percent less compared to its 1980 peak ($2287 oz.).

Crude oil is considerably less expensive. Its current price of $69 per barrel is cheaper than its inflation-adjusted 1980 peak of $132 per barrel by fifty percent.

Another way to say this is that the cost of oil today is the equivalent of $20 per barrel in 1980 prices.

The silver price also peaked in 1980 and is cheaper today by more than eighty percent in inflation-adjusted terms. Even in nominal terms, silver is cheaper by more than fifty percent ($23.00 oz compared to $49.00 oz.) compared to its 1980 peak…

Silver Prices (inflation-adjusted) – 100 Year Historical Chart

historical-silver-prices-100-year-chart-2021-08-09-macrotrends

Prices for some commodities, such as wheat and sugar, peaked prior to 1980.

The nominal price of wheat peaked at $12.00 per bushel in March 2008. That was nearly double the nominal wheat price peak of $6.32 per bushel in February 1974.

However, in inflation-adjusted terms, it was only slightly more than one-third of its 1974 peak. At $7.19 per bushel currently, wheat is nearly eighty percent less expensive than in 1974.

The current sugar price at $.1867 per pound is cheaper by almost seventy percent compared to its nominal price peak of $.60 per pound in 1974; and ninety percent cheaper in inflation-adjusted terms.

Recent talk about “soaring prices” and “hyperinflation” is somewhat overdone. For more than forty years the prices of most items have declined in inflation-adjusted terms.

DECLINES IN ECONOMIC ACTIVITIY

Also there are declines in specific areas of economic activity. See the charts below for durable goods orders, housing starts and capacity utilization rates…

Durable Goods Orders – Historical Chart

 

durable-goods-orders-historical-chart-2021-08-09-macrotrends

Housing Starts – Historical Chart

housing-starts-historical-chart-2021-08-09-macrotrends

Capacity Utilization Rate – 50 Year Historical Chart

capacity-utilization-rate-historical-chart-2021-08-09-macrotrends

The trends in lower prices and weaker economic activity are the effects of inflation that is losing its intended impact.

Regardless of the increasing amounts of inflation (money and credit) that the Federal Reserve creates, it cannot predict or depend on the intended stimulus effect that was apparent at times in the past.

This is because the effects of cumulative inflation result in increasing volatility and unintended consequences.

The obvious sign of inflation’s effects is the loss of purchasing power in the currency (US dollar); but the elements of volatility and unpredictability counter the intended stimulus.

MORE INFLATION? NO CHOICE IN THE MATTER

Over time, more and more inflation yields less and less of the intended results. This is much like the pattern experienced during drug addiction. We have reached the point where the Fed cannot tell how much inflation is ‘necessary’ and how much is too much.

Is a certain amount of inflation really ‘necessary’? It is if you want to maintain relative stability and avoid the pain of collapse and economic depression.

Unfortunately, following that prescription means committing to endless inflation. Ironically, the pain of withdrawal from our inflationary addiction is necessary in order to heal. The choice is between getting better, which includes painful withdrawal symptoms of credit collapse, deflation and economic depression; OR getting sicker and possibly dying.

At this point in time, a decision might be thrust upon us which is triggered by one or more of those unintended consequences.

STRAIGHT FROM THE HORSE’S MOUTH

Here is another chart which shows very clearly how the effects of inflation are waning…

fredgraph

(What is FRED? Short for Federal Reserve Economic Data, FRED is an online database consisting of hundreds of thousands of economic data time series from scores of national, international, public, and private sources. FRED, created and maintained by the Research Department at the Federal Reserve Bank of St. Louis)

As can be seen on the chart, the effects of inflation peaked in 1980.

THE END IS NIGH

As far as what is meant by Chairman Powell and Treasury Secretary Yellen regarding the term “transitory” as it has been applied to current inflation rates, I believe they are both correct.

More important is the reasoning and motivation behind their use of the term.

The Fed and the Treasury (Yellen) know very well that the biggest risk factor today is not hyperinflation (see Two Reasons Hyperinflation Is Unlikely). Rather, it is a lack of liquidity.

The lack of liquidity could easily morph into credit collapse and economic depression. These things are the natural end results of over a century of inflation.

Use of the term transitory in referring to inflation deflects attention away from the threat of a deflationary collapse. If one is truly worried about whether or not current higher prices for goods and services is temporary, then one won’t be as likely to ask other more embarrassing questions.

One of those possible questions concerns whether the Fed really has any control over things. They don’t. Remember, the effects of inflation are unpredictable.

Also, Fed efforts for the past two decades have been primarily focused on putting out fires and patching leaky boats.

All decisions and policies put forward by the Fed might better be characterized as window dressing. The patient is on life support and there isn’t much to do except wait for the eventual end.

Kelsey Williams is the author of two books: $100 Silver Has Come And Gone and $100 Silver Has Come And Gone

Waiting On Silver

However, an examination of those fundamentals reveals a different picture. That picture is inconsistent with the call for higher silver prices.

SILVER SUPPLY & DEMAND, RATIOS

The supply deficits (gaps in consumption over production) have been talked about for decades. In the 1960s and 1970s they were the principal fundamental justification in the case for higher silver prices.

Throughout the twentieth century, industrial use of silver increased to the point where the consumption of silver eventually exceeded new production. This is the start of the consumption/production gap to which people refer. The government then became a willing seller in order to keep the price down. The specific purpose was to keep the price from rising above $1.29 per ounce. This is the level at which the amount of silver in a silver dollar (not Silver Eagles) is worth exactly $1.00.

The huge price gains for silver that occurred in the 1970s were largely attributable to years of price suppression prior to that. Those years of price suppression, though, were preceded by decades of price support.

Neither price suppression, nor support, are significant issues at this time. The primary imbalance in supply and demand was corrected in the 1970s. If it hadn’t been, the silver price might be much higher than it is.

Expectations for a return to a 16-1 gold/silver ratio will go unfulfilled. The gold-to-silver ratio that existed one hundred fifty years ago was mostly the result of political influence and appeasement. There is no fundamental reason which justifies any particular ratio between gold and silver. (see Gold-Silver Ratio: Debunking The Myth)

Gold to Silver Ratio – 100 Year Historical Chart

gold-to-silver-ratio-2021-07-25-macrotrends

As can be seen in the chart above, the gold-to-silver ratio continues to widen in favor of gold.

SILVER FUNDAMENTALS

Silver is an industrial commodity. Its primary demand is driven by – and its price is determined by – industrial consumption. Any role for silver as a monetary hedge is secondary. This is true even in light of the significant increase in the amount of silver used in minting bullion bars and coins; particularly Silver Eagles.

The fundamentals simply do not support the bullish expectations for silver. Also, there are fundamentals that make silver vulnerable to a big price drop.

Deflation is a more likely near-term possibility than hyperinflation. True deflation results in a decrease in the general price level of goods and services.

As an industrial commodity, the silver price would reflect the full brunt of deflation’s effects. The depression-era low for silver occurred in late 1932 at $.28 oz. This low coincided with the stock market’s low.

Something similar happened in March-April 2020, when both silver and stocks declined by thirty-five percent.

Another possibility is that we might continue for several more years with relative prosperity and disinflation. This would not stop further price declines for silver.

SOME HISTORICAL PERSPECTIVE

After it peaked at $48.00 per ounce in 1980, silver’s price declined ninety-two percent over the next thirteen years. It reached a low of $3.57 oz. (February 1993) during the boom years of the 1990s.

It has been ten years since silver last peaked at close to $50.00 oz. At the current price of approximately $25.00 oz., silver is cheaper by one-half. This is shown on the chart (source) below…

Silver Prices – 10 Year Historical Chart

historical-silver-prices-100-year-chart-2021-07-25-macrotrends-2

Given that, does it matter much that silver has doubled in the past year. All of that increase is just a matter of recovering some lost ground.

Historically speaking, most of the reasons people give in support of dramatically higher silver prices, lose credibility when one looks at the facts.

CONCLUSION

Silver is ineffective as a monetary hedge because it is not a store of value. Silver would need to be over $100.00 per ounce right now to roughly approximate what gold’s current price of $1800 oz. reflects regarding the loss in purchasing power of the US dollar over the past century.

It is not remotely close to that number and there is no historical precedent to expect the gap between gold and silver to narrow in silver’s favor. As long as the US dollar continues to lose purchasing power, the gap between gold and silver prices will continue to widen in favor of gold.

In addition, on the few occasions when silver has increased in price dramatically, it has given up most or all of the gains in short order.

In other words, there is likely more downside ahead for silver’s price. And it could be quite significant.

(also see $100 Silver Has Come And Gone)

Kelsey Williams is the author of two books: $100 Silver Has Come And Gone and $100 Silver Has Come And Gone

What’s Next For Gold Is Always About The US Dollar

Not coincidentally, but in direct reflection of the dollar’s loss in purchasing power, the price of gold has multiplied one hundredfold from $20.67 oz to $2060 oz as of August 2020.

The chart below shows the ever-increasing price of gold over the past century…

GOLD PRICE LINKED TO US DOLLAR

When President Nixon suspended convertibility of the US dollar into gold in 1971, his action ushered in a decade-long period of US dollar weakness and rejection.

The effects of inflation created over the previous four decades, initially in an attempt to extricate us from the economic depression of the thirties, then to fund the country’s expenses relative to its involvement in WWII, etc., came roaring to life in the form of higher prices for all goods and services.

The rapid rise in the prices for goods and services in the United States was a reflection of the loss in purchasing power of the US dollar. Consequently, the dollar price of gold moved considerably higher and peaked intraday in January 1980 at $843 oz. The average monthly price for gold in January 1980 was $677 oz, which is reflected on the chart above.

The 1970s were a catch-up period for the price of gold relative to the US dollar’s loss in purchasing power. The $677 price for gold indicated that the US dollar had declined by nearly ninety-seven percent at that point since the origin of the Federal Reserve.

After that, the Fed found religion and managed to temporarily halt the dollar’s decline. A new period of prosperity and economic growth buoyed the dollar.

The effects of inflation were surprisingly mild for the next two decades. A stronger dollar showed up in lower gold prices. By 1999, the gold price had fallen to $252 oz., a decline of seventy percent.

Beginning in 2001, the US dollar began a significant decline on world markets lasting until 2008. During that time the price of gold rose from $256 oz to as high as $1023 oz.

A secondary low for the US dollar occurred in 2011. This was closely concurrent with a peak in gold’s price at $1896 oz.

Again, as in the period following gold’s price peak in 1980, the US dollar began a multi-year period of strength and stability. The muted effects of inflation between 2011 and 2016 resulted in a lower gold price.

The price of gold declined from $1896 oz. to $1049 oz. during that period, a loss of forty-five percent.

The price of gold since then has risen to $2060 oz. and subsequently declined back to $1675 oz. Meanwhile, the US dollar has neither gotten much weaker nor strengthened to any measurable degree.

INFLATION-ADJUSTED GOLD PRICES

The chart below illustrates the link between gold’s price and the US dollar. It is similar to the previous chart except that the one below allows for the effects of inflation.

There are five major turning points for gold’s price that are reflected on the chart. All five turning points (1933, 1971, 1980, 2000, 2011) coincided with changes in the US dollar.

Gold is priced in US dollars and since the US dollar is in a state of perpetual decline, the US dollar price of gold will continue to rise over time, as is shown in the first chart.

There are periodic changes in US dollar valuations and these changes can last for years (1980-2000; 2011-2016). During such periods the price of gold can and does decline considerably.

Gold’s value is not determined by world events, political turmoil, or industrial demand. The only thing that you need to know in order to understand and appreciate gold for what it is, is to know and understand what is happening to the US dollar.

The US dollar is in a constant state of deterioration, punctuated with periods of temporary strength and stability. The dollar price of gold reflects the deterioration by moving higher over time, usually after the fact.

Gold is not forward-looking. The higher price of gold in dollars is a reflection of the loss in purchasing power that has already occurred.

GOLD – WHAT TO EXPECT NEXT

As far as gold is concerned, the only thing that will take its price higher is further lasting deterioration in the actual purchasing power of the US dollar.

  • If you think that a collapse in the US dollar is imminent, and that runaway inflation is just around the corner, then load up on gold. But don’t expect to get rich if you are correct. At best, all you can expect is to maintain your current level of purchasing power for whatever wealth you have already accumulated.
  • If we have a period of relative tranquility and economic prosperity with mild inflation effects, then gold’s price could languish or decline for many years.
  • A financial collapse with credit defaults would likely usher in a long-lasting economic depression and deflation. The deflation would result in price declines for all assets of anywhere from 60-90 percent or more. And, yes, that includes gold.

CONCLUSION

The value of gold is constant. Its price changes according to changes in actual purchasing power of the US dollar.

Higher gold prices usually come after longer periods of time when the cumulative effects of previous inflation become more apparent.

If you want to know and understand what is happening to gold’s price, then you need to know and understand what is happening to the US dollar.

Changes in the price of gold do not tell us anything about gold; they tell us what has happened to the US dollar.

(also see Gold Price – $700 or $7000)

Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED!

Higher Gold Price Vs. Inflation Expectations

That sounds logical, but it is not that simple.

There is a relationship between higher gold prices and inflation, but the two are not directly related. The confusion results from a misunderstanding about inflation and its effects.

Inflation is the intentional debasement of money by government and central banks. The inflation is accomplished by the expansion of the supply of money and credit. All governments inflate and destroy their own currencies.

The debasement of money, i.e., inflation, leads to a cheapening of the value of money in circulation. This results in a loss in purchasing power which translates over time into higher prices for most goods and services.

The higher prices are the effects of inflation. Those effects are volatile and unpredictable.

This makes it difficult to rely on simple financial and economic statistics, complicates ordinary business decisions, distorts financial planning projections, and skews the economic cycle.

The skewing of the economic cycle results from the Fed’s efforts to mange the stages of the economic cycle in an attempt to avoid recessions and depressions.

They do not do a good job of it. In fact, the Federal Reserve tends to cause the very recessions and depressions they claim to be trying to avoid.

UNPREDICTABLE EFFECTS OF INFLATION

Inflation is a tool used by central banks to create conditions that allow for all banks to lend money and finance activities of particular interest to them. Whatever the situation or cause, the money center banks are there to lend money, and profit from it continuously.

Right now people are expecting inflation to get a lot worse because of the Fed’s latest response to financial and economic catastrophe. The inflation, however, has already happened.

The staggering amounts of money and credit expansion in response to last year’s Covid-19 related economic shutdowns, and the subsequent price inflation of financial assets, have some fervently decreeing an imminent dollar collapse and all that that implies.

What most are expecting are much higher prices; maybe even to the extent of what is called runaway inflation, or hyperinflation. Again, those higher prices are the effects of inflation which has already been created.

We said earlier that the effects of inflation are volatile and unpredictable, which is true. That is due in large part to the subjective judgement involved.

Small business owners, large corporations, laborers, hairdressers, restaurant owners, etc., all make subjective determinations about how much to charge for the goods and services we all buy and use.

Investors allow for the effects of inflation when making decisions regarding the purchase and sale of securities, real estate, etc.

In other words, the US dollar’s current level of purchasing power; its standing in world markets, and its degree of acceptance in domestic and international markets are the result of billions of individual choices and decisions that are subjective in nature and always changing.

CREDIT COLLAPSE AND DEFLATION

Now throw into the mix that for several decades, the inflation created by the Fed is losing its intended effect. Even the Fed seemed baffled by the lack of impetus after their actions to revive financial markets and restore economic growth just over a decade ago. (see The Fed’s 2% Inflation Target Is Pointless)

Whatever else some say about the US dollar, whatever are the expectations of certain writers and investors, the US dollar is NOT falling apart. It is not now, nor for the past decade, shown the weakness that some have expected and predicted.

A bigger, more ominous risk is the likely possibility of another credit collapse accompanied by full-scale depression and deflation. This is the primary fear of the Federal Reserve and other central banks.

Events and conditions such as these are exactly the opposite of those which correlate with “much higher inflation and much higher gold prices.”

What this means is that we will need to see renewed, lasting, significant weakness in the US dollar, manifest in the form of much higher prices for everything we buy and sell, IF gold prices are going to move higher to a degree that matches the fantasies of some investors and advisors.

(also see The Federal Reserve And Long Term Debt – Warning!)

Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED!

Two Reasons Hyperinflation Is Not Likely

The effects of inflation show up in the form of higher prices for all goods and services.

Hyperinflation is defined as “out-of-control general price increases in an economy, …typically measuring more than 50% per month.” (source)

There are two specific reasons why hyperinflation re: out of control general price increases for all goods and services, possible US dollar collapse, etc., is unlikely.

REASON NO. 1) FED INFLATION IS LOSING ITS INTENDED EFFECT

For the past century, the Federal Reserve Bank of the United States has been debasing the US dollar by continually expanding the supply of money and credit.

The effects of that inflation are represented by a loss in purchasing power in the US dollar of ninety-nine percent.

The inflation that is created by governments and central banks is intentional and ongoing. The Federal Reserve and other central banks expand the supply of money and credit so that member banks can lend money perpetually.

Problems arise when governments and central banks cannot keep the effects of inflation in check. Historic examples of hyperinflation are France in 1790s and the Weimar Republic (Germany) in the 1920s.

A different (deflation rather than hyperinflation) example of a central bank being unable to manage the effects of its own inflation is the Great Depression in the United States during the 1930s.

Here is a chart (source) that shows annual CPI rates dating back to 1914…

Note that the chart begins with the year 1914, one year after the inception of the Federal Reserve. A cluster of double digit increases (green bars) in consumer prices ends in 1919.

What history refers to as the Roaring Twenties was ushered in by a collapse in commodity prices and an economic depression so severe that it lasted for almost two decades. Only in the cities and for the wealthiest people were the effects seemingly non-existent.

The cluster of red bars reflects the extent of price deflation that occurred during the 1920s and 1930s.

In 1941, the year the United States entered World War II, the CPI rate shot up to 10% and stayed at relatively higher levels for another decade.

Then in the mid-1950s, the CPI began a 25-year run of increasingly higher rates, peaking in 1979-80 at 13.29% and 12.52%; at that time the highest rates in more than thirty years.

Since 1980, CPI rates have declined steadily. Recent upticks notwithstanding, the CPI rate been trending down for more than forty years.

The last double-digit rates of increase for the CPI occurred in 1979 and 1980. Also, the average annual rate of inflation as measured by the CPI has declined in every decade since the 1970s.

Furthermore, the actual annual CPI rate has been below 4% every year since 1990 except 2007, when it came in at 4.08%.

This seems somewhat incongruous in light of the fact that the biggest and most brazen money creation by the Federal Reserve has come in the past two decades.

It is not so much important as to why this is occurring. What is important is that it is occurring and that the effects are a century old in the making.

Now think back a few years to the attempts by Fed officials to “talk up” higher inflation rates post 2008-2010. (see The Fed’s 2% Inflation Target Is Pointless)

And, remember how more than just a few people expected hyperinflation and much higher gold prices after 2011?

Regardless of any reasoning, conjecture, and analysis to the contrary, the facts are clear that the effects of inflation are not meeting expectations.

REASON NO. 2) FED INFLATION IS FUELED BY CHEAP CREDIT

In late 18th century France and in early 1920s Germany, inflation was practiced the old-fashioned way – they printed the money into existence.

That led to absurd levels in pricing for various goods and services. This was evidenced by the fact that the price of one loaf of bread in Germany went from 14 marks to 200,000,000,000 (200 billion) marks in just three short years.

Today, most of the money supply expansion by the Fed is digital in nature and credit-based. This accomplishes the inflation creation more conveniently. It has also allowed the Fed to respond to financial and economic crises in a startling fashion.

As a result, the entire world economy is awash in cheap credit. Companies and entire industries function on cheap and easy credit. Most of them would not be able to stay in business otherwise.

Unfortunately, the dependence on cheap credit has increased the vulnerability of our financial system.

When you consider a fractional-reserve based banking system, and retail sectors such as housing, automobiles, student loans, small businesses that are all funded with credit, the numbers are mind-boggling.

The situation is much worse when factoring in derivative investments that are priced exponentially disproportionate to underlying investments of nominal or token value.

The use of leverage, i.e., borrowed money, dwarfs any underlying value, whether it be a house, a car, ETF, uncovered options writing, junk bonds, etc.

There is a historic precedent for financial collapse following an abundance of easy credit by the Federal Reserve. A prominent example is the stock market crash in October 1929.

See the chart (source) below…

From its peak in August 1929 at 380 to its nadir in July 1932 at 44, the Dow Jones Industrial Average lost almost ninety percent. Most individual investors lost everything.

Buying on margin became so popular that by the late 1920s, “ninety percent of the purchase price of the stock was being made with borrowed money.” Not only that … the U.S. economy had come to depend on that activity. Before the crash, nearly forty cents of every dollar loaned in America was used to buy stocks.” – www.awesomestories.com – Oct 24, 2015

CONCLUSION

Extensive use of credit for speculative ventures is considered normal today. Any lessons learned after the events of a century ago have been mostly forgotten. For those who care to know.

  1. The risk of a multi-asset price collapse is greater today than any risks associated with hyperinflation.
  2. Historically speaking, long periods of entrenched inflation always end in economic collapse.
  3. An economic collapse can happen either with (Germany 1918-23), or without (United States 1930s) experiencing hyperinflation.

Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED!

$4000 Gold – Insurance, A Hedge, An Investment

GOLD AS INSURANCE

There is a seemingly plausible argument for calling gold a hedge or insurance given volatile conditions in our society today. But the logic leading to those classifications ignores the single factor that affects the price of gold. That single factor is the actual loss in purchasing power of the paper money substitute in which gold is priced.

Historic instances of extreme civil unrest, political instability and insurrection are most times associated with amplified concerns regarding the local fiat currency. A higher price for gold is a reflection of the cumulative deterioration of the currency in which it is priced.

It is especially important to remember this today. If you wake up some morning this fall and find that gold is priced at $4000 oz., it can only happen after the US dollar has lost additional purchasing power of fifty percent.

In other words, by the time gold is at $4000 oz., it will cost you twice as much for everything you need. You will need $100,000 per year to pay for what costs you $50,000 per year now.

This does not mean that further increases in the supply of money and credit are guarantees that the dollar will collapse or that its purchasing power will disappear overnight. (see Gold Price Is Not Correlated To Money Supply)

GOLD AS A HEDGE

As far as being a “hedge against inflation”, some clarification is in order.

Inflation is the debasement of money by government.
All governments (and central banks) inflate and destroy their own currencies.
What most people mean by the term ‘inflation’ are really the effects of inflation. Those effects are volatile and unpredictable. (People expected hyperinflation in the late 1970s and early 1980s. It didn’t happen. They expected it again after 2011. It didn’t happen. Similar expectations are voiced daily about the prospects for hyperinflation now. It is less likely now than before.)

Some say inflation is back and that it has returned with a vengeance; but inflation never went away. It is ongoing, continuous, and deliberate. (see Inflation – What It Is, What It Isn’t, And Who’s Responsible For It)

Gold acts as a restraint on government’s propensity to inflate its way to prosperity; or a central bank’s desire to create money in perpetuity that it can lend to all comers.

Gold is not immune to inflation, though. (See  Mansa Musa, Gold, And Inflation)

GOLD AS AN INVESTMENT

When gold is characterized as an investment, the incorrect assumption leads to unexpected results regardless of the logic. If the basic premise is incorrect, even the best, most technically perfect logic will not lead to results that are consistent.

If we think of gold as an investment, then it’s not too hard to see why some might refer to it as a barbarous relic. As indicated in the chart (source) below, gold’s price performance when viewed as an investment is not strong enough to merit the consideration of most investors and financial advisors…

Gold Price vs Stock Market – 100 Year Chart

gold-price-vs-stock-market-100-year-chart-2021-06-04-macrotrends

It is hard to argue favorably about gold’s merit as an investment when stocks have outperformed it by a margin of 6 to 1. That gap continues to widen dramatically in favor of stocks.

There is potential, however, for a more favorable view of gold as an investment when we look at the following chart…

Gold Price vs Stock Market – 20 Year Chart

gold-price-vs-stock-market-100-year-chart-2021-06-04-macrotrends-2

As can be seen, it has been more profitable to hold gold rather than stocks for the duration of the 21st century. But that is somewhat misleading since the ratio turned in favor of stocks again after gold peaked in 2011. See the chart below…

Gold Price vs Stock Market – 10 Year Chart

gold-price-vs-stock-market-100-year-chart-2021-06-04-macrotrends-3

Quite plainly, stocks have reasserted their deserved role as a preferred long-term, buy and hold investment. Over the past decade, stocks have outperformed gold by a 9 to 1 margin.

That really is as it should be; at least insofar as gold is concerned. That is because gold is not an investment. It is real money; original money.

Holding gold rather than stocks is similar in theory to selling stocks and holding cash. Cash is preferable for shorter periods. Gold is a better option for longer periods because its rising price will compensate for the continuous decline in the US dollar.

Don’t impute any value to holding gold other than its use as real money. If you want the potential investment returns of stocks, then buy stocks.

The use of strategy and timing involving gold does not change its characteristics. And a profitable trade in gold is not indicative of any special considerations regarding gold’s investment value. There are none. (see Gold’s Not An Investment – You Won’t Get Rich).

SUMMARY AND CONCLUSION

  1. Gold is real money – original money. Gold’s higher price over time reflects the cumulative loss in purchasing power of the US dollar.
  2. Gold is not an investment and it is not forward-looking. Higher gold prices at this point in time will come only after a further, significant loss in US dollar purchasing power is evident in fact; not in theory. Sometimes that takes several years, maybe decades. (think 1980 -2008; and 2011-2020)
  3. Gold is not a hedge against inflation. Inflation is the intentional debasement of fiat currencies by governments and central banks to suit their own purposes. Owning gold helps to compensate for the loss of  purchasing power which occurs as a result of that inflation.
  4. If a complete breakdown in the US dollar occurs, the price of gold in dollars will skyrocket. So will the price of everything else we buy and sell. If you own gold before a dollar  collapse, then your gold will maintain its purchasing power. The higher dollar price per ounce will offset the higher prices you pay for everything else – just to survive.

Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED!

Are Silver Prices Really Cheap; And Does It Matter?

Whether it is a deficit in new production of silver or the gold-to-silver ratio, there is always something to talk about; so let’s talk.

Below is a chart (source) of silver prices for the past century…

Silver Prices – 100 Year Historical Chart

silverchartnewarticle

The chart is plotted using average closing prices for spot silver so the peak shown in 1980 is $36 oz., which is an average of closing prices for the month of February 1980. The peak intraday price was $49 oz. in January 1980.

In either case, with spot silver currently under $28 oz., silver is definitely cheaper than it was in early 1980.

That does not, however, make silver a bargain at its current price. The actual average price for the entire year 1980 was $20.98 oz. With the average closing price for 2021 at more than $26 oz., then silver is more costly by an average of $5 oz., or twenty-four percent.

The two parallel lines identify a price zone for silver between $20 – $40 oz. The total time that silver prices were actually within that range or higher amounts to less than five years.

Since the chart includes a total of 106 years, that means silver has traded at prices below $20 oz. for more than ninety-five percent of the past century.

Conversely, we might say that silver at $27 oz. is not cheap. In fact, after adding the exorbitant premiums that accompany the purchase of physical silver (Silver Eagles, junk silver coins, etc.), silver is quite expensive; more than almost any other time shown on the chart.

However, a realistic assessment of silver prices is not complete unless we consider inflation-adjusted prices. Here is the same chart as above, but with silver prices adjusted for inflation…

Silver Prices – 100 Year Historical Chart (inflation-adjusted)

silverchartnewarticle2

In the chart above, the same parallel lines of $20 and $40 are shown. On an inflation-adjusted basis, most of the price history for silver is still under $20 oz.

An imaginary line at $30 oz. compares more closely to the $20 oz. in the first chart and reinforces how significant the recent $30 oz. stopping point is in silver’s price history.

Even on an inflation-adjusted basis, silver is still more expensive than almost any other time in the past one hundred years. After adding premiums for actual physical silver in various forms, the acquisition price approaches $35-40 oz.

Some will argue that expectant price increases for silver will make any of this type of analysis unnecessary, or moot. However, the reasoning behind those expectations are more grounded in fantasy than actual fundamental fact.

SILVER SUPPLY-DEMAND GAP

One of the so-called fundamentals that seem to attract unwarranted attention is the supply-demand gap in production (mining) of silver relative to consumption.

“The gap in consumption over production that existed in the late sixties and early seventies was one of several things that contributed to much higher silver prices. But when all is said and done, and after decades of ‘fundamental’ arguments about such an imbalance, silver has failed to show any further signs of a need for revaluation in price because of consumption/production gaps, past or current.” (see No Silver Lining Here)

GOLD-TO-SILVER RATIO

Another favorite argument trumpeted in silver’s behalf is the reliance on a return to gold-to-silver ratio of 16:1. The ratio currently stands at 67 and was as high as 120 last year. Below is a chart of the ratio…

gold-to-silver-ratio-2021-05-21-macrotrends

Silver investors who are depending on a declining gold-to-silver ratio are betting that silver will outperform gold going forward. But, if anything, the chart (see link above) shows just the opposite. For more than fifty years, the ratio has held stubbornly above a rising trend line taking it to much higher levels.

In the Mint Act of 1792, the U.S. government arbitrarily chose a 16:1 ratio of gold prices to silver prices. The actual prices were set at $20.67 per ounce for gold and $1.29 per ounce for silver.

“There is no fundamental reason which justifies any particular ratio between gold and silver.” (see Gold-Silver Ratio: Debunking The Myth and Gold-Silver Ratio And Correlation)

SILVER – WHAT NOT TO EXPECT

SILVER – WHAT NOT TO EXPECT

  1. Don’t expect silver to outperform gold. Gold is real money and its higher price reflects the actual loss in purchasing power of the US dollar. As long as the dollar continues to lose purchasing power, the price of gold will continue to move higher relative to silver.
  2. Don’t expect silver’s price to rise if stocks collapse. A collapse in stock prices more likely would usher in hard times economically; maybe recession or depression. Silver is primarily an industrial commodity, so it is very price sensitive to economic slowdowns. When stocks fell at the onset of Covid-inspired closures and shutdowns last year, the price of silver fell by a larger percentage, before moving higher along with most everything else.
  3. Don’t expect silver to rise above $30 oz. and stay there. That would be a refutation of everything we know about silver historically.
    Don’t expect a special circumstance or event to void any of the above.

SILVER – WHAT SHOULD YOU DO?

What you do depends on your reasons for owning silver.

  1. If you own silver and are expecting large-scale fantasy price increases, reread this article and the other ones referenced.
  2. If you got in early on the latest upswing and have some nice profits, take them.
  3. If you own some silver coins against the possibility of a collapse in the US dollar, keep them and go about your business.
  4. If you have larger amounts of wealth you want to protect, consider gold. It is a much better choice.

Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED!

A Fair Price For Gold – $1000 Or $2000?

We know that gold is currently priced at more than $1800 per ounce; so the value of gold today is what we can buy with one thousand eight hundred dollars.

But is $1800 dollars per ounce realistic? Does it represent fair value? Are there reasons why we might expect that price to rise or decline to any substantial degree that would influence our choice to hold money in gold vs. US dollars?

Let’s go back to a time when both gold and the US dollar circulated as money, were freely convertible, and were equal in value.

A century ago, both gold and US dollars were legal tender, and interchangeable. Either was convertible into the other at a fixed price. A one ounce (.97 ounces) gold coin was equal to twenty US Dollars and vice-versa (the official gold price was $20.67 per ounce, which multiplied by .97 ounce of gold in a gold coin equals $20.00).

With the current price of gold at $1800, some would be tempted to say that the value of gold over the past one hundred years has increased by eighty-six hundred percent. But that would mean that one ounce of gold today will buy eighty seven times as much as it would a hundred years ago. We know that is not the case.

The specifics are two-fold: 1) Gold gained in price by eight-six hundred percent relative to the US dollar. 2) The US dollar declined by more than ninety-eight percent relative to gold.

GOLD AND US DOLLAR PURCHASING POWER

Now we need to know how both gold and the U.S. dollar fared in absolute terms regarding purchasing power. You can read about that in my article A Loaf Of Bread, A Gallon Of Gas, An Ounce Of Gold

The results are clear. Gold has maintained its value, and even increased its purchasing power in absolute terms, over the century-long period under consideration.

What we don’t know is the extent to which the current price of $1800 per ounce reflects accurately the effects of inflation that have occurred to this point. More specifically, how much purchasing power has the US dollar lost? Is it ninety-eight percent or less; ninety-nine percent or more?

A gold price at $1800 indicates a specific loss of 98.8% in US dollar purchasing power. A ninety-nine percent decline in the value of the US dollar translates to a gold price of over $2000 per ounce. If the decline is closer to ninety-eight percent, then the gold price should be closer to $1,000 per ounce.

In August 2011, gold peaked at almost $1900.00 per ounce. That indicates a loss in purchasing power of the U.S. dollar close to ninety-nine percent (98.9%).

Nearly four and one-half years later, in January 2016, gold traded as low as $1040.00 per ounce. That price indicates a decline in U.S. dollar purchasing power closer to ninety-eight percent. A ninety-eight percent decline in U.S. dollar value equates to a fifty fold increase in the gold price (100 percent minus 98 percent = 2 percent; 100 percent divided by 2 percent = 50; $20.67 per ounce times 50 = $1033.50 per ounce).

Last August (2020) the gold price peaked at $2060. That indicates a loss in purchasing power of the U.S. dollar at ninety-nine percent, which translates to a one-hundred fold increase in the gold price (100 percent minus 99 percent = 1 percent; 100 percent divided by 1 percent = 100; $20.67 per ounce times 100 = $2067.00 per ounce).

CONCLUSIONS:

  1. The US dollar has lost between ninety-eight and ninety-nine percent of its purchasing power over the past century.
  2. Gold is realistically priced at anywhere between $1000 and $2000 per ounce.
  3. Further increases in gold’s price will come only after further actual and apparent losses in US dollar purchasing power.

Expectations for further deterioration in the US dollar will not lead to further increases in gold’s price. That is because the price of gold in dollars represents the actual loss in purchasing power that has already occurred.

In other words, gold is approaching its upper boundary ($2060)) based on actual accrued losses in US dollar purchasing power (99%).

Items for consideration that could have a substantial impact on the US dollar include 1) new and unexpected actions by the Federal Reserve; 2) a clearer picture of the enormity of the Fed’s balance sheet; 3) accelerated, delayed effects of inflation previously created by the Fed; 4) a credit implosion; 5) Fed’s reaction to a credit implosion; 6) Deflation and Depression.

Some items above can affect the value of the US dollar positively, which is why you need to keep your eye on the dollar, and not the specific event.

Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED!

Overheated Economies Don’ t Cause Inflation

Later that same day, she said this…

“It’s not something I’m predicting or recommending. If anybody appreciates the independence of the Fed, I think that person is me, and I note that the Fed can be counted on to do whatever is necessary to achieve their dual mandate objectives.”

Also last week, we heard from the Federal Reserve which released the following statements on Thursday, May 6, 2021…

  • Rising asset prices are posing increasing threats to the financial system, the Federal Reserve warned in a report Thursday.
  • “Asset prices may be vulnerable to significant declines should risk appetite fall,” the central bank said.

Before we can understand how to interpret these statements and any possible conflictions, there are four key topics that need to be explained: inflation, the Federal Reserve, interest rates, and the economy.

INFLATION IS CAUSED BY GOVERNMENT

Inflation is the debasement of money by government and central banks. The debasement is accomplished by continually expanding the supply of money and credit. Also, the inflation created by the Federal Reserve is intentional.

The Federal Reserve has been expanding the supply of money and credit intentionally for more than one hundred years.

FEDERAL RESERVE IS A BANKER’S BANK

The purpose of the Fed is to provide a structured environment for the creation of money, so that banks can lend money (i.e., a banker’s bank). The expansion of the supply of money and credit (inflation) allows banks to continue to lend money in perpetuity.

The Fed’s inception in 1913 was authorized by Congress with the understanding that the Federal Reserve would try to mange financial activity in such a way as to avoid panics and crashes.

What wasn’t publicly known was that in order to harness political support for the bill authorizing the Fed’s creation, a promise was made to the United States Government that it would always provide whatever money was necessary for the government to fund its operations.

INTEREST RATES AND THE ECONOMY

The effects of inflation are volatile and cannot be quantified in advance, no matter how much we know about money supply growth.

Panics and crashes have become more severe and their damaging economic effects are longer lasting than prior to inception of the Federal Reserve.

In order to induce economic activity that will encourage retail lending and consumer spending, the Fed has resorted to interest rate manipulation.

Artificially low interest rates for the past several decades have fostered an economy dependent on cheap credit. A rise in interest rates to more normal levels would create cataclysmic conditions.

On the other hand, if the Fed continues to maintain artificially low interest rates, they run the risk of overstimulation (think drug overdose).

There is a difference between higher asset prices and economic activity. Higher asset prices themselves are not a cause or symptom (effect) of inflation and they are not indicative of an economy in danger of overheating.

The reason for the high, over-inflated asset prices is the cheap and abundant credit supplied by the Fed.

Sometimes, statements are made that imply a link between growth in our economy and inflation:

“We have to “manage the growth” so the economy doesn’t “grow too quickly” and “trigger higher inflation”.

Statements like this are false and misleading.

POWELL AND YELLEN – TEAM FED PART 2

Ms. Yellen knows all of this, of course; so why the subterfuge?

Her allegiance has not changed. She is still a member of the same team (see Powell And Yellen – Team Fed), but she plays the game at a different position.

Secretary Yellen has said that “interest rates will have to rise somewhat…”.

What she is saying is that rates cannot remain at artificially low levels without expectant, long-term damage.

Chairman Powell has said that as long as interest rates stay low, the valuations are justified. That is not exactly correct…

The reason for the high, over-inflated asset prices is the cheap and abundant credit supplied by the Fed. An abundance of cheap credit does not justify the extreme valuations; but it does explain them.

Taken together, both Chair Powell’s and Treasury Secretary Yellen’s statements, coupled with statements released by the Fed on May 6, 2021, are telling us that something big is about to happen.

A WARNING!

Here is what you need to know…

Both the Federal Reserve and the United States Treasury have warned us that something big is about to happen.

The warnings are an indirect admission that those who are supposedly charged with maintaining the integrity and stability of our financial and economic systems have lost control.

Expect interest rates to rise. Expect asset prices and financial markets to drop.

An asset price crash and credit collapse are likely upon us soon.

(Also see Asset Price Crash Dead Ahead. You can read about the Electronic Communications Network here.)

Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED!

Gold Price During Hyperinflation

Let’s start by defining hyperinflation…

“Hyperinflation is a term to describe rapid, excessive, and out-of-control general price increases in an economy. While inflation is a measure of the pace of rising prices for goods and services, hyperinflation is rapidly rising inflation, typically measuring more than 50% per month.” (source)

In addition, hyperinflation is described as “an extreme case of monetary devaluation that is so rapid and out of control that the normal concepts of value and prices are meaningless.”

The latter description is much more characteristic of the potential threat that most people envision when they invoke the term hyperinflation.

Before answering that, let’s look at what happened to the prices of bread and fuel.

The lady pictured above is stuffing German marks into her wood burning stove. Such action was cheaper since the paper currency would burn longer than the amount of firewood they could afford to buy with the worthless ‘money’.

HYPER-HYPERINFLATION

During a period of stabilization for approximately six months during 1920, 1400 German marks was equal to 1 oz. gold. Three years earlier the ratio was 100 marks to 1 oz. gold.

However, a fourteen-fold increase in the ratio of marks to gold was nothing compared to what was about to happen.

“By July 1922, the German Mark fell to 300 marks for $1; in November it was at 9,000 to $1; by January 1923 it was at 49,000 to $1; by July 1923, it was at 1,100,000 to $1. It reached 2.5 trillion marks to $1 in mid-November 1923, varying from city to city.” (source)

Using the ratio of 1 trillion marks to the US dollar in July 1923, the equivalent price for one ounce of gold was 20 TRILLION German marks!

HOW IT HAPPENED; WHAT IT MEANT

Germany (Weimar Republic) had rejected gold convertibility and abandoned the gold standard prior to the end of World War I. Since their obligations to pay reparations resulting from their activities during the war required them to remit funds in hard currencies, they continued to ramp up the presses.

Any plans to borrow money had been abandoned earlier. They printed whatever marks were needed in order to buy other currencies which they could use to pay their obligations, and hopefully chase away the inflationary effects of their efforts.

Here is another example of how those effects translated in real life…

“A student at Freiburg University ordered a cup of coffee at a cafe. The price on the menu was 5,000 Marks. He had two cups. When the bill came, it was for 14,000 Marks. “If you want to save money,” he was told, “and you want two cups of coffee, you should order them both at the same time.”

If we use a price of 5 cents per cup of coffee in US dollars, then the ratio at that time was 140,000 marks to $1. Even though the worst was yet to come, this still represents a 27,900 percent increase in the price of a cup of coffee from five years earlier.

At one point in 1923, the price for one loaf of bread was more than 200 billion marks.

WHAT’S THE POINT?

Some (not just a few) people today think that the higher the gold price goes, the richer they will be. That is not the case.

One ounce of gold in 1920 was the equivalent 1400 German marks. Three years later, that same ounce of gold was priced at the equivalent of 20,000,000,000,000 German marks.

If you were prescient enough to secure to yourself one ounce of gold before the fun started, you could have become a multi-trillionaire almost overnight. Great!

Now, how will you spend your money? Better get something to eat first before tackling a plan for your finances. You could buy a loaf of bread for two hundred billion marks and a cup of coffee for fifty billion marks.

If you buy the loaf directly from the baker, you might score a free cup of coffee. Nobody even knows what price to charge for a cup of coffee anyway, and the baker desperately needs to sell that bread. He is only inclined to make that offer if he is paid in gold, though.

You decide to buy five loaves since you don’t know how much bread will cost next week. You give the baker 1/20th oz of gold which is the equivalent of one trillion marks ( 5 loaves x 200 billion marks = 1 trillion marks). You and your friends enjoy drinking the five free cups of coffee and you break bread with them.

You are not as jovial as you were before your purchase, though. You know that you are not as rich, either. Doing some quick math, you realize that if you spend 1/20th oz gold every day, you will be a pauper again in three weeks.

What you could buy with your gold after its price went up did not make you rich. The value of your gold is the same as it was three years earlier. The price for the bread and coffee is the same as it was just a few years earlier: 1/20th oz of gold.

CONCLUSION

If you own gold and are betting on a much higher gold price because you expect hyperinflation anytime soon, don’t expect to be any richer than you are now. The higher price for gold will only compensate you for the loss in purchasing power of the US dollar

(also see Gold’s Singular Role)

Kelsey Williams is the author of two books: Gold’s Singular Role  and  Gold’s Singular Role

Higher Gold Price Is Not Correlated To Money Supply Growth

In fact, it is considered almost scriptural canon that a huge increase in the money supply will lead inevitably to a huge increase in the gold price. Historical examples of France in the late 18th century, Germany (Weimar Republic) in the 1920s, and Zimbabwe or Venezuela more recently, are often cited as proof of the relationship between money supply growth and its effect on gold prices.

That is not the case, though. Below is a chart that shows the ratio of gold prices to the monetary base dating back to 1918…

gold-to-monetary-base-ratio-2021-04-25-macrotrends

Since the gold price peaked in 1980, the ratio has declined starkly. The low point (.28) was reached in December 2015. All of this decline occurred within the context of quantifiably larger growth in the supply of money and credit.

More telling is that all of this decline occurred while the price of gold increased from $850 to $2000 per ounce; whereas the decline in the ratio between 1934 and 1970 occurred while the gold price remained fixed at $35 per ounce.

So, we have an ongoing increase in the gold price, yet the ratio of the gold price to the monetary base continues to decline. Seems like it should be the other way around. Or, maybe it is not the money supply growth which determines the gold price. Maybe the gold price is reflective of something other than the supply of money.

In fact, it is. The higher price of gold is correlated to the loss in purchasing power of the US dollar.

Equally important is that the loss in purchasing power of the US dollar is NOT quantifiably predictable. In other words, a doubling of the money supply over any specific period of time, does not necessarily mean that the US dollar will lose half of its purchasing power.

The expansion of the supply of money (and credit) IS inflation. The effects of that inflation, such as loss in purchasing power of the US dollar, are volatile and unpredictable.

(Read more about the US dollar and the gold price in my article Gold And US Dollar Hegemony.)

Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT  and  ALL HAIL THE FED!

Gold Prices – Don’t Get Too Excited

Contrastingly, the chart of GLD prices pictured below doesn’t look all that great…

At this point, a further one-hundred dollar increase in the price for gold (GLD) will not break the downtrend line of overhead resistance dating back to August 2020.

For some additional perspective, here is a chart (source) of gold prices for the past ten years…

The magnitude and severity of gold’s price decline is quite apparent. Also, the potential for further downside shouldn’t be dismissed.

As it is, the price of gold could decline back to $1330-1360 without breaking the ascending line of support which dates back to December 2015; which happens to be the point where gold reached its lowest price after peaking in August 2011. That’s the good news.

BAD NEWS

Below is a one-hundred-year history of gold prices:

On this chart, the long-term ascending rise in gold prices has a line of support dating back to 1970.

Assuming that the ascending line of support is a valid reference point for analyzing gold’s price movements over the past half-century, then gold’s price trend is well-supported.

But, the line of support shown in chart no. 2 previously, and again in the chart immediately above, is not as long in duration and not likely as strong. Hence, the possibility of gold prices below $1300 is not remote.

In fact, if gold prices are unable to hold support at the $1330 – $1360 level, then a decline to just above $1000 per ounce becomes a strong possibility.

MORE BAD NEWS

Our final chart is also a one-hundred year history of gold prices, this time inflation-adjusted…

Again, referencing the same line of support dating back to 1970, and allowing for the possibility of the gold price not holding the five year line of support in the mid $1300s (if it gets that low), then the new potential downside price target for gold is closer to $600 per ounce.

That is a sobering thought if you are betting on much higher gold prices. Also consider that in real terms, after allowing for the effects of inflation, gold at $2000 per ounce today is cheaper than it was at $600 per ounce in 1980.

Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED!

No Fear Of Inflation; Threat Of Deflation

The Fed wants to have their cake and eat it too, but the cake is stale. Jerome Powell’s remarks in testimony before the Senate last week provoked considerable attention.

Responses, interpretation, and analysis by observers were many and varied. Unfortunately, no one learned anything different from what they thought they knew before Powell’s testimony.

The Fed is well aware of the problem. It is systemic in nature and goes far beyond corporate due diligence, bank liquidity, and the safety of your broker.

Most everyone else (with the exception of Janet Yellen, Ben Bernanke, and Alan Greenspan) thinks they understand the problem, but their limited understanding doesn’t allow for the subtleties of Fed Chair behavior.

Chairman Powell and his “inner circle” want very much for you to focus on inflation. By talking about inflation, they hope that possibly it will spur behavior that might provoke a resurgence of economic activity and stave off the coming economic collapse.

That last piece of stale cake is never as tasty and satisfying as the first piece, cut from that freshly baked culinary delight. It might do us all well to know what is in that cake.

The Fed’s recipe has never changed. For more than one hundred years, they have been baking an inflationary cake that is making people sick. The cake is now old, stale, and crumbling.

PURPOSE OF THE FEDERAL RESERVE

The Federal Reserve and all central banks, in conjunction with their respective governments, inflate and destroy their own currencies intentionally. It is a plan with purpose and real intent that allows banks to do what they do best – lend money.

The Federal Reserve was formed for the purpose of cultivating a financial system that would allow banks to create and lend money in perpetuity.

The Fed creates the money and the banks lend it. Even retail banks create inflation by making loans to their customers via fractional-reserve banking. The Federal Reserve also makes sure that the US government has all the money that it wants to spend.

WHAT INFLATION IS AND WHAT IT ISN’T

INFLATION is the debasement of money by government . The action of expanding the supply of money and credit is inflation.

The debasement of money leads to a loss in purchasing power of the currency which shows up in the form of higher prices for all goods and services over time. In addition, decisions regarding financial planning, capital expansion, etc., become skewed. These effects of inflation are unpredictable.

Inflation is NOT a spontaneous event that just happens under certain conditions. Inflation is the conscious and intentional act of debasing the supply of money by those in charge; whether that be a central bank or a government.

Before digital money, even before paper money, inflation was a problem…

“Early ruling monarchs would ‘clip’ small pieces of the coins they accumulated through taxes and other levies against their subjects.

The clipped pieces were melted down and fabricated into new coins. All of the coins were then returned to circulation. And all were assumed to be equal in value. As the process evolved, and more and more clipped coins showed up in circulation, people became more outwardly suspicious and concerned. Thus, the ruling powers began altering/reducing the precious metal content of the coins. This lowered the cost to fabricate and issue new coins. No need to clip the coins anymore. (see History Of Gold As Money)

FED IS AFRAID OF DEFLATION

Deflation is the opposite of inflation. DEFLATION is a contraction in the supply of money and credit.

The effects of deflation result in fewer dollars in circulation and an increase in purchasing power.

The overwhelming effect of deflation would be a catastrophic economic depression, such as that which occurred in the 1930s.

Deflation is the Fed’s biggest fear. It is the inevitable end result of too much inflation. A depression would not be good for banks and lending activities.

The problem is that the bond market is shouting that a credit collapse, deflation, and economic depression are on the horizon. The Fed knows this and can’t do anything about about it.

That is exactly why they want you to look the other way.

Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED!

For a look at all of today’s economic events, check out our economic calendar.

 

Gold’s Singular Role

The state of confusion that exists regarding gold and gold prices is exacerbated by the contradictions and conflicting arguments of almost all concerned parties. This includes investors, traders, analysts, brokers (make sure your broker is safe to trade), bankers, etc.

Rather than a desire to understand gold and its singular role, most investors and others are interested in gold only when its price is going up. They buy it and then look for reasons to justify their expectations of even higher prices.

They do look for explanations as to why the price goes down, of course; especially when that happens after they have taken a position on the long side. By then, it is usually too late.

GOLD’S SINGULAR ROLE

There is one overriding fundamental with respect to gold: “GOLD IS REAL MONEY”.

Money has three specific characteristics: 1) medium of exchange; 2) measure of value; 3) store of value. In order for something to be money, it must have all three of these attributes. Otherwise, it is not money.

The US dollar is not money because it does not embody all three of the necessary characteristics. It is an accepted medium of exchange and a measure of value, but it is not a store of value.

Gold is also original money. It was money before the US dollar and all paper currencies, which are merely substitutes for real money; in other words, substitutes for gold.

Lots of things have been used as money during five thousand years of recorded history. Only gold has stood the test of time.

WHAT GOLD IS NOT

The simplest, and most accurate way to say what gold is not, is to state emphatically: “GOLD IS NOTHING ELSE OTHER THAN MONEY’.

Gold is not an investment; nor is it a hedge. Gold is not insurance. Gold is not a safe haven. Gold is not silver’s handsome twin brother. Gold is not a barbarous relic. Gold is not an outdated earlier version of the cryptocurrency craze. Gold as money is not an idea whose time has come and gone.

Gold is nothing other than money. Its use in jewelry is always secondary to its role as money. Gold is money that can be used for adornment, but it is still money, nonetheless. Always.

THE VALUE OF GOLD

The value of gold is in its role and use as money. It is divisible into fractional units for transaction purposes and is a proven store of value.

Gold’s value is constant and unchanging. One ounce of gold today will purchase amounts of goods and services roughly equivalent to what it could have bought fifty, one hundred, or one thousand years ago.

The reason the value of gold does not change is because gold, itself, is unchangeable.

WHY DOES THE PRICE OF GOLD CHANGE?

It is logical and reasonable to ask “If gold is unchangeable, and its value is constant, they why does its price change?

The changing price of gold is attributable to one thing only: changes in the value of the US dollar.

Over the past century, the US dollar has lost between ninety-eight and ninety-nine percent of its purchasing power. Correspondingly, the price of gold has increased by a multiple of fifty ($1050 per ounce) to one hundred ($2060 per ounce) times its original fixed and convertible price of $20.67 per ounce.

The chart (source) below shows a one hundred-year history of rising gold prices.

historical-gold-prices-100-year-chart-2021-03-24-macrotrends

Over that same one hundred years, what you can buy with an ounce of gold remains stable, or better. (see my article A Loaf Of Bread, A Gallon Of Gas, An Ounce Of Gold)

SUMMARY

Gold’s singular role is its use as money. Gold is real money because it carries the qualifying characteristics of money, including that of a store of value.

The value of gold is directly attributable to its use as money. Gold’s value is constant and unchanging. The higher price of gold over time is a reflection of the ongoing loss in purchasing power of the US dollar.

Gold’s value is not determined by world events, political turmoil, or industrial demand. Gold is not correlated to interest rates or anything else. Gold is not a hedge or a safe haven; nor is it an investment.

Gold is real money and nothing else.

Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT

Gold And US Dollar Hegemony

All currencies are substitutes for real money, i.e. gold. And because all governments inflate and destroy their own currencies, any potential alternatives to the US dollar are as bad or worse.

That doesn’t stop the dollar bashing, of course. In a general long-term sense, the condemnation is well-deserved. After all, the US dollar, under the care and watch keeping of the Federal Reserve Bank of the United States, has lost more than ninety-eight percent of its purchasing power.

The possibility of gold reasserting itself as the international medium of exchange continues to increase; but, a lot more bad stuff has to happen before we get to that point. Also, governments around the world have too much at stake to capitulate when it comes to ceasing to issue ‘funny money’.

For the time being, let’s focus on things as they are.

PRICE OF GOLD IN EUROS AND FRANCS

Gold is priced in US dollars and trades in gold are settled in US dollars because of the hegemony of the dollar and its role as the world’s reserve currency. But what does that mean to others around the world? For example, what about those who live and work in Germany (euro), Japan (yen), China (yuan) or Switzerland (franc)?

When someone in Switzerland, for example, exchanges Swiss Francs for gold, they are quoted a price in Swiss Francs. That seems pretty straight-forward. But how is the price for gold in Swiss Francs calculated when the international market for gold is priced in US dollars?

The amount that someone pays in Swiss Francs (or any other non-USD currency) is determined by calculating the exchange rate between the US dollar and the specific non-USD currency involved. Based on that calculation, it is then known how many Swiss Francs are needed to equal the transaction amount in US dollars.

What is particularly important here isn’t necessarily obvious. However, it is a critical factor when assessing a transaction of this nature, and here is why…

On December 31, 2013, gold traded at $1210 per ounce. And on that day one euro could be exchanged for 1.3776 USD. Hence, 842 euros ($1210 USD divided by 1.3776 = 842) could be exchanged for $1210 USD which could then subsequently be exchanged for one ounce of gold.

Nine months later, on September 30, 2014, gold again traded at $1210 per ounce. But the exchange rate for one euro was 1.2629 USD. Even though the gold price in US dollars was unchanged, the cost for an ounce of gold in euros had increased nine percent to 958 ($1210 divided by 1.2629 = 958). To be technically correct, the cost of US dollars had increased for holders of euros.

On May 31, 2016, twenty months later, gold was again trading at $1210 per ounce. The euro had weakened further relative to the US dollar and the exchange rate for one euro was 1.1131 USD. Using the same math as before, the cost for $1210 US dollars had again increased, this time by an additional thirteen percent to 1087 euros.

Over the entire two and one-half year period (twenty-nine months in all) the cost to acquire gold for holders of euros had increased by twenty-four percent. And yet, gold priced in US dollars was the same.

There are several things we can learn from this.

DEMAND FOR US DOLLARS

For one thing, there is always demand for US dollars since they are needed for use in international trade (oil transactions are priced in US dollars, too).

For another, changes in exchange rates of any other currencies relative to the US dollar must be considered and applied in order to complete the desired transaction.

The possible combinations are numerous and always different. An increase in the value of the euro relative to the US dollar in the examples above would have given us results opposite to those which actually occurred. And, of course, every currency other than the US dollar would show different results based on their changes in value relative to the US dollar.

Currency exchange rates are changing continuously. In addition, the exponential growth of online brokerage platforms, such as Olymp Trade, make it possible for almost anyone to have access to foreign exchange markets around the clock. This increases potential volatility and adds to the confusion.

It is also possible to have an increasing US dollar price for gold and, simultaneously, a stronger US dollar relative to another currency. This results in a ‘double whammy’ to the holder of a non-USD currency.

In the examples cited, the US dollar price of gold could actually have declined for the periods indicated and still resulted in a higher cost for holders of euros.

GOLD PRICE VS VALUE

The US dollar price of gold does not tell us ‘what gold is doing’. It tells us what the US dollar is doing. Or rather, has done. It also tells us what people think is happening to the US dollar currently and what they expect (further weakness, additional loss in purchasing power, etc.) in the future.

But what people think is happening changes all the time. Hence, changes in the US dollar relative to gold are ongoing and can be quite volatile. Over time, however, the gold price in US dollars is a reasonably accurate reflection of the value of the US dollar.

The US dollar price of gold does not tell us anything about other countries and their currencies. To know that we must look at exchange rates of those currencies relative to the US dollar.

The value of gold (see How Much Is Gold Really Worth?) does not change. It is original money. Gold’s value is constant and unchanging.

The value of the US dollar, however, changes all the time. This is because the supply of dollars is manipulated by the Federal Reserve via the ongoing expansion and contraction of the supply of money and credit. Mostly expansion.

Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED!

For a look at all of today’s economic events, check out our economic calendar.

Gold and US Dollar Hegemony

All currencies are substitutes for real money, i.e. gold. And because all governments inflate and destroy their own currencies, any potential alternatives to the US dollar are as bad or worse.

That doesn’t stop the dollar bashing, of course. In a general long-term sense, the condemnation is well-deserved. After all, the US dollar, under the care and watch keeping of the Federal Reserve Bank of the United States, has lost more than ninety-eight percent of its purchasing power.

The possibility of gold reasserting itself as the international medium of exchange continues to increase; but, a lot more bad stuff has to happen before we get to that point.

Also, governments around the world have too much at stake to capitulate when it comes to ceasing to issue ‘funny money’. For the time being, let’s focus on things as they are

PRICE OF GOLD IN EUROS AND FRANCS

Gold is priced in US dollars and trades in gold are settled in US dollars because of the hegemony of the dollar and its role as the world’s reserve currency. But what does that mean to others around the world? For example, what about those who live and work in Germany (euro), Japan (yen), China (yuan) or Switzerland (franc)?

When someone in Switzerland, for example, exchanges Swiss Francs for gold, they are quoted a price in Swiss Francs. That seems pretty straight-forward. But how is the price for gold in Swiss Francs calculated when the international market for gold is priced in US dollars?

The amount that someone pays in Swiss Francs (or any other non-USD currency) is determined by calculating the exchange rate between the US dollar and the specific non-USD currency involved. Based on that calculation, it is then known how many Swiss Francs are needed to equal the transaction amount in US dollars.

What is particularly important here isn’t necessarily obvious. However, it is a critical factor when assessing a transaction of this nature, and here is why…

On December 31, 2013, gold traded at $1210 per ounce. And on that day one euro could be exchanged for 1.3776 USD. Hence, 842 euros ($1210 USD divided by 1.3776 = 842) could be exchanged for $1210 USD which could then subsequently be exchanged for one ounce of gold.

Nine months later, on September 30, 2014, gold again traded at $1210 per ounce. But the exchange rate for one euro was 1.2629 USD. Even though the gold price in US dollars was unchanged, the cost for an ounce of gold in euros had increased nine percent to 958 ($1210 divided by 1.2629 = 958). To be technically correct, the cost of US dollars had increased for holders of euros.

On May 31, 2016, twenty months later, gold was again trading at $1210 per ounce. The euro had weakened further relative to the US dollar and the exchange rate for one euro was 1.1131 USD. Using the same math as before, the cost for $1210 US dollars had again increased, this time by an additional thirteen percent to 1087 euros.

Over the entire two and one-half year period (twenty-nine months in all) the cost to acquire gold for holders of euros had increased by twenty-four percent. And yet, gold priced in US dollars was the same. There are several things we can learn from this.

DEMAND FOR US DOLLARS

For one thing, there is always demand for US dollars since they are needed for use in international trade (oil transactions are priced in
US dollars, too).

For another, changes in exchange rates of any other currencies relative to the US dollar must be considered and applied in order to
complete the desired transaction.

The possible combinations are numerous and always different. An increase in the value of the euro relative to the US dollar in the examples above would have given us results opposite to those which actually occurred. And, of course, every currency other than the US dollar would show different results based on their changes in value relative to the US dollar.

Currency exchange rates are changing continuously. In addition, the exponential growth of online brokerage platforms, such as Olymp Trade, make it possible for almost anyone to have access to foreign exchange markets around the clock. This increases potential volatility.

It is possible to have an increasing US dollar price for gold and, simultaneously, a stronger US dollar relative to another currency. This results in a ‘double whammy’ to the holder of a non-USD currency.

In the examples cited, the US dollar price of gold could actually have declined for the periods indicated and still resulted in a higher
cost for holders of euros.

GOLD PRICE VS VALUE

The US dollar price of gold does not tell us ‘what gold is doing’. It tells us what the US dollar is doing. Or rather, has done. It also tells us what people think is happening to the US dollar currently and what they expect (further weakness, additional loss in purchasing power, etc.) in the future.

But what people think is happening changes all the time. Hence, changes in the US dollar relative to gold are ongoing and can be quite volatile. Over time, however, the gold price in US dollars is a reasonably accurate reflection of the value of the US dollar.

The US dollar price of gold does not tell us anything about other countries and their currencies. To know that we must look at exchange rates of those currencies relative to the US dollar.

The value of gold (see How Much Is Gold Really Worth?) does not change. It is original money. Gold’s value is constant and unchanging. The value of the US dollar, however, changes all the time. This is because the supply of dollars is manipulated by the Federal Reserve via the ongoing expansion and contraction of the supply of money and credit. Mostly expansion.

Kelsey Williams is the author of two books: How Much Is Gold Really Worth? and How Much Is Gold Really Worth?

Gold Prices Then (3/2020) And Now (3/2021)

Subsequent rebounds in stocks, bonds, and real estate took valuations to levels as high or higher (much higher for stocks and gold) than before the turbulence took hold. Some might refer to those valuations as nose-bleed levels, although the summit for peak ascension is always moving when the effects of inflation are factored in.

Gold had its day in the sun, too. After falling sympathetically with other markets, gold’s price began an aggressive climb of more than 40% in just four months’ time.

IS THAT ALL THERE IS?

It seemed like a runaway win for gold over everything else. Then something changed. While stocks and real estate continued their climb to lofty levels, gold began a seven-month slide back to its pre-pandemic price.

Over the past seven months, from its peak price in August 2020 at $2070, gold has dropped four hundred dollars per ounce back to $1683, its closing price last Monday on March 8th.

Almost exactly one year ago, on the inauspicious day of Monday March 9, 2020 gold closed at $1680.

After three huge monetary stimulus bills, ongoing new money creation by the Federal Reserve on a daily basis to support the bond and money markets, amidst expectations for rejection and repudiation of the US dollar, and possible runaway inflation; after all of this and more, the net gain for gold for the entire year March 9 2020 to March 8 2021, is a paltry $3 per ounce.

This is pictured on the chart below:

gold-price-last-ten-years-2021-03-14-macrotrends

It is what it is.

Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT  and  ALL HAIL THE FED!

Powell And Yellen – Team Fed

Flashback 11/21/2017:

“President Trump nominated Jerome H. Powell as the new Chairman of the Federal Reserve Bank. Don’t look for much to change. And Janet Yellen’s announcement that she will resign from the board upon Mr. Powell’s induction as board chair is pretty much a non-event.” (see New Fed Chairman, Same Old Story)

Chairman Powell said that as the economy improves, it “could create some upward pressure on prices” but that the effects would likely be transitory

Treasury Yellen likes the word transitory. Five years ago, when she was Federal Reserve Board Chair, she referred to a slowdown in the job market as likely “transitory”.

A year later, in 2017, in reference to concern that the effects of inflation remained weak, she said “My colleagues and I are not certain that it is transitory, and we are monitoring inflation very closely,”

LOTS OF POSSIBILITIES

As it is now, Treasury Secretary Yellen appears to feel similarly to Fed Chairman Powell. When she was asked about volatility in the financial markets over the past two weeks, she said that rising interest rates are a sign that prospects for the economy are starting to improve.

That is a possibility. It is also a possibility that interest rates could move higher and that the economy wouldn’t improve; and that the effects of inflation get a lot worse. Or, rates could move much higher in tandem with a credit collapse resulting in deflation and another Great Depression. (see A Depression For The 21st Century)

THE FED – PROMISES, PROMISES

They tell us it will be better next year, but they have been telling us that for most of this century. They also promised us that things wouldn’t get worse, but they did.
Treasury Secretary Yellen told us when she was still Board Chair at the Federal Reserve that “another financial crisis is unlikely in our lifetime because of the measures the Fed has taken”.
Was what happened last year not a financial crisis?  Of course it was; and a lot more.
“Regardless of Covid-19, a lack of fundamental underpinnings had left the stock market extremely vulnerable to a selloff of considerable magnitude, regardless of the specific trigger event.”
Team management has even admitted some of their mistakes in the past (“Fed caused Great Depression” – Bernanke).
Nevertheless, it is late in the fourth quarter and we are way behind. And there is no air in the ball.