Economics & Investing For Preppers

Here are the latest news items and commentary on current economics news, market trends, stocks, investing opportunities, and the precious metals markets. We also cover hedges, derivatives, and obscura. Most of these items are from the “tangibles heavy” contrarian perspective of SurvivalBlog’s Founder and Senior Editor, JWR. Today, we look at the stock market rebound–most likely a bull trap rally. (See the Equities  section.)

Precious Metals:

Gold bid/offer spreads blow out to $100 in loco London market. JWR’s Comment: Things are definitely askew when the “paper” gold market says that gold is trash while simultaneously the physical gold market says that gold is treasure.

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Gold Price Tells Us Nothing About Gold

Economy & Finance:

I’ve concluded that America has been visited by its long-feared Black Swan. Tragically, the gub-mint’s chosen response was to start limitless and ceaseless bailouts in an attempt reinflate The Everything Bubble. But this will likely wreck our economy, shrink the Middle Class, and destroy the Dollar as a currency unit. – JWR

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Reader ST85 spotted this troubling news at the Federal Reserve web site:

“As announced on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020.  This action eliminated reserve requirements for all depository institutions.”

ST85 warns:  “I expect bank runs.”

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CNBC: Negative rates come to the US: 1-month and 3-month Treasury bill yields are now below zero

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The check is in the mail (“real soon”): Coronavirus stimulus checks will come within three weeks, Mnuchin saysJWR’s Comment: This is Robinhood-ism, plain and simple! Do you make more than $75,000? Well, then, “No check for you.” Uncle Sam will instead tap your wallet, and hand it to Mr. Democrat Voter. Worst of all, the Everything Bailout (with plenty of corporate welfare) will triple the Federal Budget Deficit for the year–an extra $2 Trillion for us taxpayers to gradually re-pay, plus interest!

At Wolf Street: Four Mortgage REITs Collapse After Chaos Hit Markets for Residential & Commercial Mortgage-Backed Securities

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An interview with a market trader that covers a lot of ground at Real Vision Daily Briefing: Roger Hirst: There’s No Quick Fix For The Fed

Commodities & Supply Chain:

Nick Cunningham: Don’t Believe The Oil Bulls

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Amazon’s New ‘Essential Items’ Policy Is Devastating Sellers

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John Mauldin: Some Positives in a Virus Wracked World

Equities:

The rally on Wall Street that started on Tuesday  (March 24, 2020) was expected.  Yahoo Finance reported on Thursday evening:

“By the end of the session, the S&P 500 clinched its third straight day of gains for the first time since mid-February. The Dow climbed more than 20% from its recent closing low of 18,591.93 from March 23.”

JWR’s Comments: This rally smacks of desperation Plunge Protection. This is another form of Quanitative Easing — with the Federal Reserve buying piles of stocks and now even Exchange Traded Funds (ETFs). This QE is the beginning of “QE to Infinity.” Don’t be suckered by Bull Trap (“sucker’) rallies. This sort of bull is not your friend. Take these rallies as opportunities to get out of any stocks that you don’t consider fully depression proof. – JWR

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Wall Street & Crypto Surge on Developing US Stimulus Talks: Is It a Bull Trap?

Forex & Cryptos:

Surging U.S. Dollar Is Next Big Headache for World Economy

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Coronavirus Stimulus Offered By House Financial Services Committee Creates New Digital Dollar

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Becoming a Safe Haven: A Year of Bitcoin Correlation With Gold

Tangibles Investing:

Three news stories that illustrate how your investment guns have a very ready market, if you ever need to generate some cash:

‘It’s insanity’: Savannah gun shop sees empty shelves amid coronavirus pandemic

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Neither hurricanes nor 9/11 caused as big a surge in gun sales as coronavirus

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A run on guns: Mid-Shore gun shops can’t keep firearms on shelves

Provisos:

SurvivalBlog and its Editors are not paid investment counselors or advisers. Please see our Provisos page for our detailed disclaimers.

News Tips:

Please send your economics and investing news tips to JWR. (Either via e-mail of via our Contact form.) These are often especially relevant, because they come from folks who closely watch specific markets. If you spot any news that would be of interest to SurvivalBlog readers, then please send it in. News from local news outlets that is missed by the news wire services is especially appreciated. And it need not be only about commodities and precious metals. Thanks!




37 Comments

  1. In regards to the rush on guns and ammo….AWESOME!!!! Maybe we can end up with a large enough segment of the population that we can actually start to repeal some of these laws. In any case now it will be that much harder to take them all away, and hopefully all of these new owners dramatically expand the size and scope of their collections.!!!

  2. With a $2 Trillion “stimulus” package and limitless QE, etc I still don’t think it will be enough to stop the world economy from doom. Providing everyone cash to stimulate the economy is senseless if the economy is for the most part shutdown. I guess people can spend it online, or for utilities or debt but is that going to do anything to stimulate the economy? Nah. Having studied and planned for pandemics this is just wave 1. Watch China as they have started to open back up their numbers started to go back up. If you can continue to re-stock your preps you may be using now. When stay at home, do not travel orders etc are lifted and it looks like life is going back to normal prepare for wave to, get the PPE, OTC meds, etc (I’m sure you’ll still have plenty of TP).

    1. You are right that this stimulus will not be enough to stop the world economy from crashing. In fact it may be the very thing that starts the world-wide crash. I give them credit for getting the testing set up and the regulation changes and the ‘Manhattan project’ attitude to find a vaccine, but IMO, they have handled the ‘isolation’ of the public, and now the stimulus package 100% wrong.

      1. I respectfully disagree. The testing still has not been set up and no good decision can be made without that information. You can’t put out fires unless you know where they are. Or how many fires are out there.

        A friend is in a memory care facility. There are 86 residents and probably 4 times that in part time help. A resident was discovered, during a routine doctor visit, to have the coronavirus. When they reported it to the local health department and asked that everyone be tested, they were told they could on have 5 people tested. Period.

        The “Manhattan” project attitude is coming from scientists looking for a vaccine but the government has dropped the ball on testing and a lot more people are going to die because of it. IMHO

    2. I agree with you. Wave 2 of the 1918 pandemic was the real killer. People would drop dead within 12 to 24 hours of first symptoms. I certainly hope it doesn’t come to that. I don’t know if it will damage the economy beyond 2 to 3 quarters. If we keep everything shut down (and that means all states) we may not damage the economy beyond repair.

      If we open it up April 12, all bets are off. This is really the time to quietly get yourself stocked for the second wave because too many Americans think the worse is already here. It isn’t.

  3. Adding $2 trillion to the national debt will not do much. As far as paying it back I suspect the tax payer will see a devaluation of the dollar used to inflate the governments responsibility to pay debt down. But in our case they will not pay the debt down, they will only try to conceal the addition of further debt. Argentina is a good example of how this is done systematically and historically. Hard goods, land, and precious metals are your only protection. The US Government has been doing this for a lot of years and the boiled frog has paid little attention. It is called inflation, but there will come a time when slow inflation will go nuts and the dollar will take a huge hit. Perhaps another Jimmy Carter era on steroids. In these scenarios the folks in the middle will bear the brunt of the realignment. The welfare sector will just get a larger allotment to keep them from rioting and the rich will have moved into solid assets before the devaluation. Basically your children and grandchildren will be the ones that really suffer the decrease in lifestyle and I am pretty sure most of them have been coddled to the point that they will not be very good at copping with having all their dreams and asperations crushed. We can prey for a better solution but be advised history is constantly repeating it’s self and politicians seem to have been absent that day in history class.

    1. Adding $2Trillon to the debt is a big deal. But our debt was ALREADY too big to ever repay, so as long as the dollar is more attractive than any other currency, we will be OK. Then, look out !

    2. A comment about how the US Federal Government spends money now days. [It should be repeated once in awhile.]

      “America’s final bill for the fighting in the ~Pacific and ~Europe was massive. In today’s dollars, World War II cost >$4.1 trillion, according to data from the Congressional Research Service.” [MoneyWise Internet]

      The USA had far less people and production capabilities too.
      ********************************************************************************
      The U.S. wars in Afghanistan, Iraq, Syria and Pakistan have cost American taxpayers >$6.4 trillion since they began in 2001. [CNBC 11/20/2019]
      ********************************************************************************

      The lives lost, the people injured, the people treated by the Veteran Hospitals are probably not included in the total dollars. = These are the people paying the true >cost for the wars.
      *********************************************************************************

      Public expenditures (with debt) can ~benefit, the ~entire Nation and be worthwhile; especially if prosperity results. … … We’ll find out in a few years about the final value of the ‘extra’ 2 trillion dollars in debt.

      [We just might find out the total amount of ‘pork’ included in the ‘extra’ 2 trillion. The ‘pork’ benefits politicians, their cronies and constituents.]

  4. Since when is the GOVERNMENT our SAVIOR? WAKE UP, Patriots
    Good Patriot
    Mar 25, 2020
    https://www.youtube.com/watch?v=h_WETBpPhKU
    Duration – 4:09

    “A scary trend is going around with some very patriotic, conservative accounts: it’s the government’s job to save America – ???? Last time I checked, that’s the opposite of what we preach. Yet, here we are praising more money printing and gross overreach.”

    “Get your head’s out of your butts, Americans. They’re not here to save us.”

  5. You’re right JWR! Here are some other places the bailout/ “stimulus” money is going.

    From the Forbes article: “Is There Wasteful Spending In The Coronavirus Stimulus Bill?”

    “While half the nation was “sheltered in place,” here’s what lawmakers — in both parties — considered “essential spending” for coronavirus recovery:

    •$25 million in the Senate bill went to the John F. Kennedy Center For The Performing Arts in Washington, D.C. During the past ten years, the center received $68.3 million in federal grants (2010-2019). The Kennedy Center has total assets of $557 million. The Pelosi bill earmarked $35 million.

    •$75 million in the Senate bill funded the Corporation For Public Broadcasting. Why does National Public Radio and Big Bird get a coronavirus subsidy? The Pelosi bill allocated $300 million.

    An earmarked $1.1 billion in the Pelosi bill would have more than doubled the budgets of The Institute of Museum and Library Services and the National Endowment of the Arts and the Humanities. The Senate bill provided funding of $200 million.

    •$500 million in the Pelosi bill to The Institute of Museum and Library Services (FY2019 budget: $230 million). This agency is so small that it doesn’t even employ an inspector general. The Senate bill provided $50 million.

    $600 million in the Pelosi bill to National Endowment of the Arts and the Humanities (FY2019 budget: $253 million) – In 2017, our study showed eighty-percent of all non-profit grant-making flowed to well-healed organizations with over $1 million in assets. The Senate bill provided $150 million.

    •$88 million to the Peace Corps for “evacuating volunteers and U.S. direct hires from overseas.” The agency just fired all of their 7,300 volunteers working in 61 countries on March 15. The Pelosi bill allocated $90 million.

    •$250 million to the Internal Revenue Service (IRS). The subsidy would cover “taxpayer services,” “enforcement,” and “operations support.” The Pelosi bill provided $602 million.

    •$350 million to the State Department for “migration and Refugee Assistance.” This funding would help minimize the virus spread in vulnerable populations. The Pelosi bill earmarked $300 million.

    •$400 million to the federal Election Assistance Commission to assist the states with “election security grants.” The Pelosi bill provided $4 billion.

    •$30.8 billion to the Department of Education for “state Fiscal Stabilization Fund” that provides grants to support of elementary and secondary education ($13.5 billion), Higher Ed ($14.25 billion), and State flexibility grants ($3 billion). The Pelosi bill asked for $50 billion.

  6. Guns bought in a panic with out training is a hazard to everybody. Trained responsible gun owners DID NOT rush out to buy during this panic.

    As part of the EMS system I fully expect between “Accidental Discharges”, “Domestic Disturbances” and folks who’ve never REALLY used that wood stove before”House Fires” to overwhelm our limited capabilities BEFORE COVID19 puts a fair percentage of EMS out of business.

    So how sweet it is I can do my best to keep COVID19 out of my home, prepare my gardens and critters and now hope some IDIOT who’s “Disaster Preparedness” PLAN was to buy guns, ammo, Toilet Paper and freak out.

    A stray 22 bullet in the guts when the hospitals are Maxed out with COVID19 seems a BAD SITUATION. Let alone the “I’ve got a gun and some buddies lets get some FOOD and Stuff” attitude from some I’ve quietly listened too.

    Do you have a list of questionable neighbors you should be concerned about a “Hey buddy can you spare a cup of sugar” (can of SPAM etc.) and worry that a concealed pistol will pop out?

    Fresh from the gun store Guns, Ammo and Toilet Paper, NO FOOD. What could go wrong?

    Oh lets add the Illegal Druggies struggling to get that NEXT FIX? They will get MOAR aggressive and violent as the limited amounts of street drugs is drying up.

    Hey let’s add in that almost 20+ percent of “Good Normal” Americans are on Legal Drugs like anti-depressants (to handle PRE-COVID19 stresses eh?) and or Opioids for pain control. They WERE produced in China and India and are NOT being shipped to America. Given the 30-90 day cycle of prescription refills and a guess how much stock is *still* in the pipeline WHEN will our “Nice Normal” Neighbors start acting out as their legal drugs run out…..

    It’s going to get Bad, BAD as in Rodney King Riots in ALL Cities well beyond the Ghettos BAD. BAD as in your “Trusted Neighbor” breaking in your home as you go shopping FOR your Medicine Cabinet Stuff BAD.

    Think it out guys, figure out who has your back. Folks with anger issues-known drug use-alcoholism in “Normal times” are a real hazard in stressful times.

    1. Hi Michael,

      Sadly in Lincoln County, and likely even in the Flathead, Montana, meth addicts are here. On one construction job a few years back, I carried concealed as the meth-heads would fight. These were fit construction workers addicted to meth, the so called ‘devils drug’. It is the perfect name for it. I’ve had long conversations with this kind, and there is nothing they wouldn’t do to get the drug. And they are often on several drugs, including popular SSRI’s, serotonin up take inhibitors that cause people to feel good, yet also reduces their inhibitions to commit violent or suicide. So we can have a meth addict who is also dependent on SSRI’s. It is bad combination. These people are like demons, and given a lack of repercussions for illegal acts of any kind, when they are doped up, they will be very dangerous, as they can go all night and day, and are driven with a single purpose. I’m glad I have night vision, and a whole lot more to throw at this type. I suspect they would pump themselves up on meth before they attack, and would be hard to put down.

      And then there is heroin. I’ve worked for many people where clearly on some sort of drug and were difficult to work with because their grasp on reality was weak. One fellow would pay me just to sit and talk about the project, and could never get organized, and get any thing done.

    2. You both offer some important wake-up calls. I have great fear of the all the newbies gun owners without a minute of training. Trouble.

      We can only hope that the ones who did the panic-buying of guns just assumed they came loaded, as in “batteries included” and neglected to buy ammunition.

      Now dealing with addicts. Yikes. Call the cops. Oh, wait, the current response time for a cop is over an hour. Yikes, again.

      Carry on in grace

  7. This “stimulus” is folly. I see it as a reward for people who have not sacrificed and prepared a “rainy day” fund nor prepared for future events. The people who spent their money on toys such as boats, vehicles, atv’s, home theatres and other substances will benefit.

    The frugal folks who saved for this event will see their savings diluted by the government printing press. Inflation will follow. And other things.

    After the little checks are cashed the elite will have snatched a goodly part of the money.

    Well, when you receive your little stipend, spend it wisely.

  8. 1) $2 Trillion is a tad expensive for a Pump and Dump ; , i.e, pump up the stock market TEMPORARILY so the Rich can sell and move money into cash and gold. But, after all, the $2 Trillion is not the billionaires’ money.

    That $2 Trillion divided among roughly 238 million voters gives a cost of $8400 per voter. Which makes that $1200 check look like a dividend from master con artist Bernie Madoff. Especially since you won’t even get that scrap if your income is over $75,000.

    2) But if you want to look at the glass as half full, the bulk of the people being screwed by this are liberal Democrats in high expense high wage areas like San Francisco, Seattle, Silicon Valley, New York City, Chicago etc. Who get nothing.

    Just as they lost the ability to deduct their local government’s high taxes on their federal income tax with Trump’s last tax bill.

    Whereas many of the checks will go to rural Red States.

    3) Note also that the Federal Reserve is now buying a ton of worthless dreck from the billionaires. Dreck insured by the taxpayers — the best kind. That is on top of the $2 trillion in taxpayer-insured dreck the Fed still has from the Democrats’ Big Bailout of 2008-2009.

    4) I myself think it would be amusing to have a Constitutional Convention to repudiate the $23+ Trillion in federal debt —-i.e, say that the American People refuse to pay. Let the creditors go to their prostitutes in Congress who voted for it.

  9. Hmm, on the firearms issue, yes I frequent the the local gun shops around here, but more along the lines of B.S.ing than anything else. I’ve had a cc for a lot of yrs and yes I carry because of the stuff that is happening around the country before the virus showed up.And yes I’ve had a ” black ” gun ( it’s a .22 ) for close to 30 yrs and the only things that I’ve ” killed ” is tin cans, paper targets, and helped more than my fair share of striped gophers learn to run faster. But I use to think of myself more along the lines of Yosemite Sam ( to the rest of the old fellas my age that remember this cartoon characters ) , but now I’m
    more along the lines of Elmer Fudd crossed with Mr Magoo. Have nice day and a better weekend everyone. P.S. I live in the country, so I have a lot of leeway

  10. Sell guns? I might have an old bolt gun or two I’d let g….
    Laughter starts. Minutes later, I’ve got tears of laughter all over my ipad.

    By the way JWR, got my blog-stick in the mail. Thank you to you and your team! This is a great asset to my virtual library!

  11. The Covid19 crisis is serious. The quarantine/stay home request was/is necessary. Because the government shut down businesses (as was necessary) it is only right that they provide both monetary aid for the people laid off AND for the businesses because we want them to remain viable and bounce back once the shutdown order is rescinded. Will it increase the national debt? Yes but less than another great depression will. Is there unnecessary pork in this bill? Yes remember that on election day. IF we are lucky and we are able to flatten the curve of this pandemic that will be great news. BUT at the same time the success will be used by the nattering nabobs of negativism to claim that Trump failed because see it wasn’t so bad.

  12. What’s really scary is the number of people I heard saying their credit cards are maxed out! And quite a number having to pay for things using multiple cards.

    I’ve spent around $1500 so far stocking up to hold off having to hit the long term preps. A large part was for a new item that I didn’t know we now needed. But we have what we need, and no debt! Wouldn’t mind stocking a little more silver, but at least we have a good amount.

    Our pastor is calling his church to see where the needs are, and so far, everything sounds pretty good. The Lord is our shepherd, we shall not want!

  13. Well, I bit the bullet and transferred money from my investments into gold and silver. Last week when I met with my advisor he didn’t have the usual charts up for viewing a d we discussed more about life on our farm than finances. Today I felt compelled by God to call him for the value of my stocks. I lost $60,000 in 3 weeks. Spoke with my husband and we dissolved our account by purchasing gold, silver, and the rest in the bank so we can get to it.

    I was trying to balance between what the news said and what I have been reading on conservative blogs like this one. I didn’t want to act out of fear, but out of wisdom, and being a good steward of what God has given enough me.

    I am glad I didn’t wait any longer.

    1. Elli O, you didn’t lose $60,000 until you bailed and sold at bottom prices. Now, you truly have lost $60,000. Never sell at the bottom, now the folks who know the game will move in and buy your stocks at bargain prices. And when the cycle continues, they will reap the benefits of buying your stuff at a discount. This game has been going on for decades. Never sell when everyone is panicking, this is how the rich get richer, they buy during a panic and reap the rewards when recovery happens.

  14. Just an FYI, the stimulus checks going out are a loan on your 2020 tax refund filed in 2021. It’s not helicopter money but your money from the future.

    So if a family of 4 gets $3400 and they typically get $2400, they will owe $1000. However if they only get back a $1000 they will owe $2400
    This from Market Watch;
    The check is a refundable tax credit, which basically acts like a refund that you get in advance of doing 2020 taxes.

    When you file your 2020 tax return the IRS will compare your income numbers. If your income was lower than expected and you should have gotten more than you did, you’ll get a refund. If the income numbers on your 2020 tax return are higher than expected, <>

    Since the check is a refundable tax credit and is not earned income it is not considered taxable income

  15. How about donating some of the stimulus package money to the organizations that are fighting for our 2A rights? The gun grabbers are using this tragedy to oppress our rights. Let’s support the organizations that are suing these corrupt government employees. If you like my idea, please spread it around our 2A community.

    1. Mateo, Sounds like a excellent idea, sue the “blank!” (Lily,edit, though we agree with the sentiment, and the word has been heard around here on occasion, we cannot post it.) The defense for violating oaths of office/violating Constitutional Rights/Human Rights should be very amusing. Can we start with Bloomberg and Schumer?

  16. This is small potatoes. Republicans stuffed the bill with hundreds of billions of corporate welfare and bailouts for rich corporations. The airlines have spent 48 billion buying stock (giving money to shareholders, enriching CEOs) over the last 10 years instead of saving for a rainy day. Airlines are a boom or bust industry. Most of Trumps corporate tax cut also went to shareholders, not the workers or even investment in the companies. At least some of what you list has value. Funding the IRS is good. My taxes stay the same no matter what. If they have more money for investigators they use it to audit rich people, same reason bank robbers rob banks, that’s where the money is. Our election machines and infrastructure need to be upgraded. What if the Chinese decided to help democrats to counter Russian interference for Trump. Better if its a fair election.

    1. I am generally opposed to bailouts. But this is really a different situation. The government chose to shut down business. I believe that even if they had not that businesses would have shut themselves down as people self-quarantined anyway. But never the less the government shut them down. What the government wants and every reasonable thinking person wants is that after this virus crisis is over that we can resume our economy where we left off. That will not happen without some infusion of money to keep them from going bankrupt. This makes sense, it isn’t really arguable even though some will try. So that is where we are, we don’t like it (“we” being all of us in this country) we didn’t cause it but we would like to resume normal life in months and not go through a multi-year great depression simply because our government refused to take steps to prevent it.

      Now; can you “call” it “corporate welfare” or “bailouts”? Sure if you want to and it makes you feel good and superior to everyone. But what would you do??? My guess is no matter what you say you would do it would in fact result in another great depression. Do nothing and our economy collapses. Choose to not “bailout” large and small businesses and our economy collapses. Let the chips fall where they may and our economy collapses.

      Will this effort work; that is when the peak of the virus crisis passes and things begin to return to normal will most people get their jobs back and most businesses survive? We don’t know. But that is the plan and the easiest thing in the world to do is criticize people who choose to take action rather than sit and do nothing. I favor taking actions to save our economy even though I KNOW that those actions won’t be perfect and when all is said and done the economy may not come back perfectly. I prefer that course over putting my head in my hands and chanting “woe is me”…

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