Options Aren’t Just for the Undecided

McAlvany Recap • May 29 2023
Options Aren’t Just for the Undecided
MPM Posted on May 29, 2023

The apocryphal story of Damocles’ unsheathed sword suspended over his head by a thread is just about right for Americans today. Our monetary system is stressed to the breaking point, which could come at any time. The woke fringe of the political spectrum is staging an open revolution against the Constitutional government of the country, aided by politicians, organizations, and individuals of all stripes. The US has reinvigorated its conflict with a dangerous old enemy—Russia—and created from whole cloth an overwhelmingly formidable new enemy—China—both of which are joining other major countries to form a new power bloc.

Maybe the HeeHaw quartet had it right: ♫ “Gloom, despair, and agony on me. Deep dark depression, excessive misery. If it weren’t for bad luck, I’d have no luck at all. Gloom, despair, and agony on me.” ♫

At the risk of prompting the smallest violin in the world to play “My Heart Bleeds for You,” these are certainly difficult times—interesting times, if the Chinese curse is to be believed. Lives, fortunes, families, and institutions are already being torn apart. And our leaders are the cause of much of the ruin, not its solution.

People have been here before. Historically this is nothing new. But it usually ends in destruction on a grand scale. What we’re seeing now is likely just a prelude. It’s what happens when the foundations are destroyed, including truth and the human character it shapes.

Anyone who reads very much knows that Jeremiah and Daniel went into exile with their people, that Emperor Nero maniacally framed and killed many of his most faithful and productive citizens, that Bonhöffer bought the farm, and that Solzhenitsyn went to the gulag. The good guys don’t always come out on top in the short run.

The long run is different, but the short run can be brutal. That’s why people who understand the times advocate options—alternative sources of such things as food, energy, residence, and money. And the latter—money—can help with all of the former. It’s why precious metals are always a good idea, but especially in trying times.

Life’s greatest priorities are always spiritual and interpersonal in nature, but avoiding death or destruction is also a good thing. And if the sound and fury now apparent in the world signify nothing, insuring your portfolio against the losses inherent in normal bear markets is also what the metals do.

In short, precious metals are right for all seasons. They shouldn’t be your whole plan, but they should be a substantial and important part of it—now, more than ever.

Key Takeaways:

  • 2008 casts a long shadow
  • Central banks by nature inflate bubbles
  • Generative artificial intelligence short-circuits normal intelligence
  • Is the debt ceiling debate real or just theater?

The McAlvany Weekly Commentary: If history doesn’t repeat itself, or sometimes even rhyme, its second verse (or 10th) is often sung to the same tune as the first. Different words, different sounds, different message, but you know what notes are coming next. David and Kevin look at some tuneful similarities between 2008 and today—particularly with regard to relief rallies and short covering. They segue into bank woes and the resultant impact on lending, along with the Fed’s blindness to its role in causing inflation. They discuss thought control in China, along with what that says about the Chinese regime. And they discuss many of the stressors for China’s leaders and the implications of China’s troubles for the rest of the world.

Credit Bubble Bulletin: Before publishing news and analysis of the day, Doug offers a clear and insightful synopsis of economic events since the pandemic began. If you’re not sure how we got to such a difficult pass, this summary will dispel all uncertainty. You’ll marvel not that we’re in such a mess, but that we’re functional at all. And it leads up to a clear conclusion: “This is such a key Bubble Dynamic. Over time, Bubbles become increasingly vulnerable.” To keep them from bursting, central bankers resist tightening, and move quickly to re-inflate them if they spring a leak. Their actions keep the party going longer and harder, but make the hangover much, much worse.

Hard Asset Insights: Morgan focuses this week on the market’s new ostensible savior—generative artificial intelligence. While most of the market is moving sideways or down, AI stocks are moving up so strongly they’re forming rally hopes across the board. A case in point is Nvidia, whose stock set a record during the week for the greatest one-day increase in market capitalization in history. “At long last, markets have found a new momentum bubble to ride, and market participants are piling in. This is not yesteryear’s FOMO, or ‘fear of missing out.’ This craze should really be described as POMO, or ‘panic of missing out.’ ” But AI is not just exciting for investors, it’s threatening to job holders. Morgan looks at that side of the story as well.

Golden Rule Radio: Tory and Miles welcome Morgan Lewis, author of Hard Asset Insights, to the studio for this week’s program. Their focus is on the debt ceiling debate and its potential effects on the gold market. Morgan looks at the “forest” rather than the “trees” of this topic, so gives a high-level assessment of the situation. Interest rate increases over the past 15 months have so elevated our payments on the debt that proposed spending cuts are not able to appreciably bring them down. He therefore concludes that the debate is largely political theater rather than meaningful progress toward solving the underlying problem of too much debt. That fact leaves responsible fiscal policy in the hands of individuals, who have historically turned to gold. Since gold is effectively insurance against policy malpractice, and such malpractice is precisely what we’re seeing, he feels that the situation is bullish for the yellow metal.

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