murphy metal monday

Each day gold and silver continue to meander around current levels, is one more day closer to the resumption of gold and silver’s long term bull market. Why? Because relative to the rising inflation and money supply numbers, these precious metals are a bargain, and the big boys know it. The big boys continue to buy as much physical as possible AND this is inventory that is not coming back into the market. Despite increasing negative real interest rates and Basel 3 regulations which are very gold and silver bullish over the next 6-12 months, bullish sentiment is weak. And that is good news because every time these emails mention the public has lost interest, gold and silver tend to make their biggest moves higher. Of course, predicting short term price movement is a fool’s game, but the Fed has no other choice but to keep interest rates artificially low and to keep printing money. One day soon these bargain gold and silver prices will be a distant memory.

Several days ago, Mike Savage of Raymond James had the following words to say, via

I suggest you pay close attention ….

There are many warnings up there that inflation may be a lot more severe than many are currently expecting. I have been writing for a month that the central bank cannot stop the “printing and buying” schemes without risking a total collapse of stock bond and real estate markets. As a matter of fact, we have seen that just the mention of maybe raising rates by a miniscule amount a couple of years down the road, leads to a severe reaction in the “markets”.

The warnings are coming from many quarters. The latest, just this morning on July 14th, Jerome Powell chairman of the Fed, has finally ended the charade that inflation is transitory. He admitted that it is likely here to stay.  We are seeing prices rise faster than we have ever seen in our lifetimes. The inflation that is happening right now is FAR higher than is being reported and at the same time personal incomes (what most of us live on) is decreasing. Lower wages and higher prices equal financial pain. We knew it in the 1970s as stagflation.

Not only are wages falling but many who counted on personal loans are being cut off. Wells Fargo has canceled all personal loans. This is actually stunning to me because they were charging 9% to 21% on these loans. They must really be worried about defaults to give up a gravy train like that. Of course, those who relied on those type of loans will have to use credit cards that charge even higher interest rates. Another form of inflation!

I believe they did this because they are concerned about a liquidity problem that appears to be brewing. I believe it is being concealed from the rest of us by the Fed intervening in the overnight loan markets to the tune of around a $1 trillion- yes that is a $1 trillion- a day. These overnight loans are usually made from bank to bank. Since about September of 2019 pre-COVID, the banks have appeared to not trust each other, not even overnight.  So, the Fed has stepped in and provided the liquidity needed to keep the system functioning.

It is no surprise that most people just look at the headlines and go about their business not realizing that under the surface all is not well. This gets me back to the problem of counterparty risk. If any one of the major banks were to fail, they would likely all fail because they were all counterparties. They have hundreds of trillions in bets so that a 2% move against the position could be enough to wipe out the entire market value of the bank. (It is highly recommended watching the entertaining movie, Margin Call. In 2008, Lehman Brother’s went under as a result of the mortgage crisis, and the movie shows how quickly Lehman went down AND that the entire banking system worldwide came within several hours of imploding. To think now the current banking dilemma is even more precarious …..)

The bottom line is that people, companies, cities, and states are in far worse financial shape than many believe. The Federal government, since it can have the Fed- through the banks that own it- “print” money, may be in the worst shape of all but will likely be the last people questioned because of this enormous privilege. Of course, they are using this advantage to conjure up so much cash that it is well on its way to becoming worthless.

I am sure that those executing this game plan are aware that the dollar’s days are numbered. This was also true in Germany in the 1920s when their currency collapsed. The powers that be knew what they were doing would ultimately undermine the currency but the thought of what would happen if they stopped the printing was even scarier to them. It is human nature to take the easiest way out.

It is also human nature to follow the crowd. While the crowd is piling into stocks right now the smart money is buying gold and silver. This would be central banks, the major banks, countries, wealth funds and hedge funds. I should also include those regular people, like myself, who are paying attention to what is happening in the economy and markets. As a matter of fact, in Goldman Sachs last quarterly report, they announced that they had sold 20% of their equity (stock) positions. JP Morgan announced it is holding 500 billion in cash while they hold around a BILLION ounces of silver and 25 million ounces of gold. What do these people at the top of the food chain know that we don’t?

Personally, I believe they know just how close we are to the end of the cliff and are taking action to book gains and hedge their bets for what appears to be a bumpy ride ahead.

See how to protect your portfolio with gold and silver this year. Request your FREE Precious Metals Investment Guide now.