“The rich rule over the poor, and the borrower becomes the lender’s slave.”
– Proverbs 22:7
“The best way to prepare for the future,” writes reader Keith B, echoing what has become an eccentric plea in the last few months of economic downturn, “is to get on your knees and beseech the Almighty for protection.”
If our reader mail is any signal, calling upon the big guy is “all you can do” when your faith is tested by months of financial and political turmoil.
It’s being widely reported this morning that the Dow had its best October since 1976– nearly half a century. But, as our friend Jim Rickards recounted here on the Wiggin Sessions, there were three bull market rallies during the Great Depression.
Since June 1932, in fact, there have been 14. Here’s the kicker: the average length of a bull market is 3.8 years. The longest one in history was the bull we just lived through, the 11 year run from 2009 to 2020, just before the COVID-19 Pandemic collapsed the markets.
So before we get ahead of ourselves – with elections coming up and all – let’s plan to expect greater uncertainty in the markets directly ahead.
“God does tell the modern prophets what is going to happen,” reader Keith continues. Then, a turn:
Put several thousand into Shiba inu, the cryptocurrency token. That is what God is going to use for the wealth transfer. God is trashing the plans of the generational wicked, and many will go to jail. Worshiping the Lord is the best way to renew your mind. I bless you in Jesus Name.
You might be asking what cryptocurrency has to do with the Almighty. There is a reason they are called “crypto evangelists.” They roam the land preaching the gospel of Satoshi, claiming above all that Bitcoin will remain irreverent for years to come.
Perhaps more than good faith, it’s good reason.
Historically, when the markets are in turmoil gold plays the role of savior. Indeed, the gold price hit a high of $2045 on March 8, but has dropped along with stocks all year long, trading today at $1645. Down 19.5%, inching up on bear territory.
The story for “gold bugs” has not been friendly of late. Matthew Piepenburg, from Matterhorn Asset Management, and our Wiggin Sessions guest on May 6, explains why:
The price of gold is being manipulated– openly manipulated– in the over-the-counter markets and the futures markets, the OTC forward contract, futures contracts, the bullion banks. The question is why ever since we got off the Gold Standard in ‘71, the only question on any central banker’s mind is where’s the gold price. And from Great Britain to the Fed to Europe, there was a concerted effort to put a permanent short in the future’s market on gold and silver.
Last year you saw 400 million ounces on permanent short by 8 bullion banks to keep the price of silver down. The same thing, pre and post Basel with gold to manipulate the gold price.
When you have thousands of long contracts on the OTC market, but eight primary players who have immense unique amounts of leverage… and because they’re using forward contracts, a small group can use those eight banks to effectively control the price of commodities in general and precious metals in particular. That’s an open secret. To me, it’s legalized price fixing. To me, from law school, it’s fraud.
“Then again,” Mr Piepenburg concludes, “so is money printing. It’s counterfeit, but it’s legalized counterfeiting. If the federal reserve wants to create money with a mouse click that’s legal.”
The issue then, according to Piepenburg– and the crypto evangelists are the first to declare– is that “there is no honest price discovery in the gold market.” He continues:
There’s a specific interest in keeping the gold and silver price down because gold is a middle finger and an embarrassment to currencies that are failing. If gold were to go to 4,000 or 5, 6,000 an ounce Jay Powell and the Fed and Biden at the White House would be looking pretty embarrassed.
Our guest this week, Robert Breedlove, agrees. He adds, in our interview on YouTube:
We’ve debased the currency. We’ve started the process of debasing the monetary protocol, which leads to debasing the political protocols, which leads to debasing the very cohesion of civilization. And as things come more and more unglued, people will seek that trust minimized asset.
Where Breedlove differs from Piepenburg. Bitcoin is the answer to government or central bank malfeasance, not gold.
We can do some nasty math on Bitcoin priced in dollars, too.
From Bitcoin’s high on November 8, 2021 of $67,527 it’s down 67% to $20,422.
To Breedlove, that’s not the point. “Bitcoin has properties that make it superior to gold,” he maintains, “Bitcoin disrupts gold.” The market is going through its own aggressive period of price discovery for the crypto market.
The narrative Breedlove lays out – with gold covering 5,000 plus years of human history – belies the fact that Bitcoin is a scant 19 years old. It’s going to take a long time for the market to digest Bitcoin as anything other than a tradeable idea.
Until then, it may be a matter of faith. But then so is the dollar. After all, since 1971, the dollar has been backed by little else than the “full faith and credit of the U.S. government.”