Stock Market Wealth

STAND DOWN, SOLDIER: Trump Fires Silver’s STARTING GUN!

Jan 6, 2019 | Stock Market Wealth

This is good. It’s pure entertainment. After pumping over $10T dollars in credit into the global economy, central banks have been pulling the rug from under leveraged nations, corporations, and individuals for three years. The FED has led the charge, but in 2019, it looks like the ECB and the BOJ are about to join it or replace it.

Tightening isn’t as fun as accommodating monetary policy for investors. When central banks open the hose, allowing institutions, free and unrestricted usage of cheap debt, asset prices go in only one direction; north, north, north.

But, as they throttle back, to make sure inflation doesn’t get out of hand, it’s like taking away the drug from an addict – all sorts of resentments and arguments arise.

Right now, the U.S. government is in shutdown. It’s not even a short one, either. President Trump is adamant on stretching the political bend to the maximum, it seems, threatening that the shutdown will continue for months, even years, until his campaign promise of a border wall is met.

This is the reason America voted for Donald. His entire platform and, indeed, his identity, is closely tied to his ability to stay true to his word.

He must stick to his guns.

Courtesy: Zerohedge.com

One of his strengths on the campaign trail was that he came from a business and entrepreneurial background, which Hillary didn’t possess, having not worked in Corporate America for the majority of her life. She was a lawyer in her 20s, but that’s nothing compared with the persona of Trump, branded as a real estate kingpin.

Halfway through his term, labor participation looked to have bottomed, and is now ticking higher, on the backs of favorable demographics, as the U.S. is home to 80 million Millennials, who are eager to climb-up the income ladder. That’s great news.

As 2.8 billion people in China and India are looking to enjoy the same lifestyle that Europeans and Americans have come to take for granted by now, the global economy stands to keep growing out of extreme poverty, in general terms.

Not only are more and more people finding work, but there are, for the first time since 2009, noticeable wage increases. I’ve been in contact with small-business managers and have tuned-in to CEO calls from America’s largest corporations, and they’re, across the board, reporting salary raises.

Heck, I’ve raised salaries in my own businesses just recently. Twenty states are bumping minimum wages this year, as a matter of law.

Courtesy: Zerohedge.com

The stock market may be pricing-in a slowdown, even a recession, but Main Street is finally starting to see politicians catering to their needs.

This trend stands to intensify, heading into the next election cycle.

Wage increases have one proven impact on the prices of everyday items and commodities – they elevate them.

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Heading into the second half of 2019, as the ECB will likely begin tightening, the Euro will get stronger, compared with the dollar, putting added pressure on the USD to revert down, after its astonishing 2018, going to the top of the asset class performance chart.

Courtesy: U.S. Global Investors

A USD bear market doesn’t have to translate into a stock market crash, not at all. If China and the U.S. make progress, stocks can rally into euphoric valuations, while the dollar continues to sell-off.  

The reason the dollar was so abnormally strong in 2018 was that U.S. manufacturing stats were so healthy, thanks to modern fiscal policies and tax cuts, but they’re contracting, fast, as the short-term impact of these, is wearing-off.

This is another major blow for the dollar.

Investors misinterpret the price mechanisms of silver. Because of its industrial uses, slow economic conditions cause investors to believe that silver prices will not be rising anytime soon, but it is, in fact, strong industrial demand that keeps silver prices down and competitive, because miners are producing at full capacity.

In the 1970s, silver prices rose from $1.39 to $50.00 in nine years, a 36-fold multiplying boom. The global economy wasn’t strong at all during that time. It was stalling. In 2009, it began a 3-yr rally from $9 per ounce to $48, a 5.3-fold bull market, when the global economy was at its weakest.

What allows silver prices to trade for 2-3 times the production cost, a colossal premium, is investment demand, not an industrial one.

Courtesy: U.S. Global Investors
FED Chairman, Jerome Powell, just let the world know that he isn’t married to his rate-hike increases, planned for 2019, or to keep selling assets from the balance sheet.

If we’ve reached the end of this tightening cycle, silver’s price will go nuts, especially since 2018 was the weakest year for dealers and bullion purchases since 2011, in their own words.

The fact that this all coincides with the gold/silver ratio touching the extreme level of 85:1, just recently, leaves no doubt that if the circumstances that birthed the 1970s 36-fold, mind-boggling move repeat, silver has much room to take-off.

The dollar is down dramatically in purchasing power since 1980, so what was $50 back then is close to $200, in today’s money. Flip that equation on its head, and we’re trading at $4 per ounce in 1980 standards.

The potential is, unequivocally, enormous. We saw a glimpse of what can happen, when bidding demand is strong last week, when our No.1 gold pick soared from CAD$0.24 to CAD$0.40. It is clear that investors are beginning to see just how undervalued some stocks have become.

Don’t underestimate the appetite of investors looking for safe havens, after going through a year like 2018, where nothing worked.

The search is on to position early in the great rotation from tech to hard assets.

We’re going to publish an important silver alert this week, which will stun you.

Best Regards,

Lior Gantz
President, WealthResearchGroup.com

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