Economics & Investing For Preppers

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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 recent rise in the price of silver. (See the Precious Metals section.)

Precious Metals:

Futures silver and spot silver both jumped to near $20 per Troy ounce early this week. You were warned.

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Mike Maloney: Silver Soars – Where To Next? Mike Maloney

Economy & Finance:

Commercial Mortgage Delinquencies Near Record Levels

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At Zero Hedge: Paper Assets And Promises Often End In Default

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More hospitals face bankruptcy due to coronavirus losses

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At Wolf Street: Subprime Auto-Loan Delinquencies, After April Fiasco, Miraculously Healed by “Forbearance” & Stimulus Money

Commodities:

In The Wall Sreet Journal: Surging Copper Prices Signal Optimism About Global Growth

JWR’s Comment: If prices for the base metals rebound, then I expect the more “industrial” precious metals (like platinum, palladium, ruthenium, rhodium, and iridium) will also jump, correspondingly.

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OilPrice News reports: Why The Hydrogen Boom Is Good News For Natural Gas

Derivatives:

At Liberty Street Economics:  MBS Market Dysfunctions in the Time of COVID-19

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Brookings: What’s the Fed doing in response to the COVID-19 crisis? What more could it do? Here is a key excerpt:

“Securities purchases (QE): The Fed has resumed purchasing massive amounts of securities, a key tool employed during the Great Recession, when the Fed bought trillions of long-term securities. Treasury and mortgage-backed securities markets have become dysfunctional since the outbreak of COVID-19, and the Fed’s actions aim to restore smooth market functioning so that credit can continue to flow. On March 15, the Fed said that it would buy at least $500 billion in Treasury securities and $200 billion in government-guaranteed mortgage-backed securities over “the coming months.” Then on March 23, it made the purchases open-ended, saying it would buy securities “in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions.”  Market function subsequently improved, and the Fed tapered its purchases through April and May. On June 10, however, the Fed said it would stop tapering and would buy at least $80 billion a month in Treasuries and $40 billion in residential and commercial mortgage-backed securities until further notice. Between mid-March and mid-June, the Fed’s portfolio of securities held outright grew from $3.9 trillion to $6.1 trillion.”

JWR’s Comment: A trillion here, and a trillion there–and pretty soon you’re talking about real money!  All joking aside: The MBS derivatives market is still on the precipe of a major crisis that could become a general financial crisis.

Tangibles Investing:

Here is the sequence of events:

1.) Spring 2020 COVID Crisis–with empty supermarket shelves:  Americans buy more guns and ammo.

2.) Summer 2020 Urban Riots/Arson/Looting: Americans buy more guns and ammo.

3.) Summer 2020 “Second Wave” COVID Crisis: Americans buy more–a lot more–guns and ammo. Even  major distributors are reported to be nearly sold out of handguns.

4.) Summer/Fall 2020 anticipation of the Presidential Election (with a risk of a Democrat sweep): Americans will buy even more guns and ammo.

So… I expect shortages to continue. And if Sleepy Joe Biden wins and the Democrats also take control of the U.S. Senate, then I expect absolute chaos in the gun market that will persist for at least four years.

JWR’s Advice: Stock up. If possible in your state, do so without FFL dealer paperwork. Lay in supplies of handguns, battle rifles, long-range precision rifles, magazines, ammunition, night vision gear, body armor, and web gear, in anticipation of higher prices and bartering situations. And remember: Don’t just buy guns. Rather, buy weapons systems, including plenty of magazines and even cleaning kits.

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 items from local news outlets that are missed by the news wire services are especially appreciated. And it need not be only about commodities and precious metals. Thanks!


22 Comments

  1. The Fed buying treasury securities? What the Heck. The Fed creates and distributes our money, Buying and creating our debt with our own money? And I thought Bernie was crazy. What can possibly go wrong? The worm eating it’s tail in action. How much time can they buy with all the smoke and mirrors? Time to buy another sack of rice, I think.

  3. Although I agree that they will be a better and better “investment”, I am not comfortable with using weapons as currency or trade goods. Having extras to arm your true allies is great, but I do not want to make any random trading partner more lethal. Booze as trade goods makes ’em less lethal, but smart people may not want to accept it. Medical supplies may be best, because all kinds of people need them, you never have to feel ambivalent about whether you gave real value, and they pose no threat.

    1. Agreed John. Want an investment? Buy a still!!!
      They are for sale in brick-and-mortar stores in my state (kits available online nationwide if you can sweat copper joints together).
      “If the ‘head shop’ next door can sell ‘tobacco pipes’, I can sell ‘essential oil extractors’ at my home-brewing shop.”
      I liked his style… and am actually considering one – for about 400-500 clams you can get one that will work on your stove or a propane burner (like you get with a whole-turkey frying setup). If you make corn squeezings, generator fuel, or cleaning solvents and essential oils is completely up to you – I am merely suggesting investing some of your scrip into tangible tools for future use!

      1. My great grandfather supported a wife and 8 children in the mountains of NC by using a still…. Not proud of his moonshining activities, and I am certainly not advocating breaking the law, but it does illustrate the fiscal opportunities available when producing desirable items during times of lack.

    2. The time for barter and gift use of liquor and food is now. As you invest in your neighbors, a little at a time, you get to know who you trust.

      You may have a crate of ARs and another crate of AKs with three hundred loaded magazines. How many of those can you shoot by yourself? Taking the time now to invest in relationships will bring dividends later, regardless of what comes our way.

      Carry on in grace

  5. The long-anticipated Everything Bubble Crash is not coming- it is here. It is a perfect storm of 80 years of deficit spending by the Federal government, 106 years of deliberate cheapening (inflation) of the currency and converting it to worthless fiat paper by the Federal (!) Reserve and the Federal government, the subversion of our Constitutional form of government by democrats AND republicans in congress whose greatest passion is getting rich at the taxpayers’ expense and the ‘supreme’ court, who have appointed themselves to the role of dictators, and the Black Swan of the Covid-1984 virus being used to kill the economy for the express purpose of ousting a president and grabbing tyrannical powers by the totalitarian party (democrat) communists. We (well, not WE we) have exported our manufacturing jobs and are now dependent on our enemies for even medicines and critical medical devices. We could not win a war right now because we could not field enough rifles and men, let alone tanks, ships, and planes. But that is a different story. Our loss of manufacturing means that we run billion dollar trade deficits, and must support our enemies’ economies by buying their goods.
    If you don’t believe that it is starting NOW, just watch the prices of silver and gold, the price of oil, and the strength of the dollar. Get ready.

  7. Two points from the above comments to note:

    Can’t find guns or ammo anywhere, at any price.

    Precious metals (gold, silver, ska REAL money) are soaring (soon to not-be-had-at-any-price).

    These two things typically precede violence and change, just take a quick gander through history. This isn’t a political viewpoint or opinion, its a statement of fact made of observable data points. YOU have the ability to do something with this information. Doing nothing is a choice.

  8. “Fed buying treasury securities”….

    Isn’t this a lot like bouncing a check then writing a check from the same account to cover the one that bounced?!

    Note to self: Buy more of everything while it’s available – and before hyperinflation sets in.

  10. GOLD $1,912.00, SILVER $22.96, PLATINUM $937.30, PALLADIUM $2,277.90, up $43.10

    Having a hoard of any of the above, especially gold and silver: Priceless!

    Above numbers as of 5 minutes ago on APMEX. Premium on junk silver is $4.49/oz.

  11. No goat is worth that much. There are plenty of videos out there suggesting real values of gold and silver. The most common way to figure is outstanding currency divided by the amount of gold in ounces. (Trillions of dollars in currency, divided by 8100 tons of gold in Fort Knox, If I remember correctly). That would be for currency backed 100% by gold. Some people say that faith in the currency can be restored by backing it only 40%. I tend to think that it will need to be over 40% .

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