November 3, 2024 | A Canny Silver Bull Trades Ingots for T-Bonds

[The author of this week’s commentary is an old friend who worked his way up from exchange-floor clerk to commercial real estate mogul over the time I’ve known him. He has demonstrated remarkable timing, courage and patience as an investor, buying commercial real estate at the bottom of the 2007-08 crash and holding it until two years ago, when an even bigger crash that shows no sign of abating began. He also started accumulating a large position in physical silver as it fell from around $30 in early 2021 to $17 a year-and-a-half later. He recently cashed out his entire position at upwards of $33 an ounce, roughly doubling his stake. Now he is striking out in a radical new direction, deploying a large portion of his sizable gains in the most unpopular investment of the day, Treasury paper. Although no investor is infallible, my friend has never had a misstep with a series of all-in bets.

Coincidentally, or perhaps not, Comex Gold has fallen nearly $60 after coming within $1.60 of a 2803.40 target I started drum-rolling in September, when prices were $300 lower. Is the top in?  It’s too early to tell, but even if higher prices are coming, anyone who has held bullion during its steep run-up since last October could not go far wrong by taking a partial profit at these levels. RA ] 

Each time a massive wealth transfer occurs, it is caused not by an upward explosion in asset prices, but by crushing deflation such as we experienced in 2007-8.  It’s about to happen again, and not with a puny, garden-variety bear-market or recession, but with the epic crash that we have all known was coming sooner or later. The list of possible catalysts boggles the imagination, to wit: a politically wrenching transition to a second Trump term; a full-blown, bloody civil war that pits neighbor against neighbor; World War III, featuring the detonation of an electromagnetic pulse weapon over the Middle East; a Chinese blockade of Taiwan; a massive solar flare that extinguishes life on Earth; Buffett raising cash to record levels; Musk cutting Federal outlays by $2 trillion; a Covid die-off. That’s a lot of deflationary bullets to dodge, and the list is hardly complete. Who knows which of these dreadnoughts is about to throw the world into chaos? I’m betting ‘something’ is about to happen simply because stocks have been soaring for no good reason for too long, and because an event that will shock investors back to their senses is long overdue.

Never Fade the Sage

If you’re still reading this, whether for belly laughs or because you enjoy doomsday porn, let me get to the point: I’m selling many thousands of ounces of gold and silver that I’ve accumulated over the last decade and putting the proceeds into Treasury paper. That’s right: I’m liquidating a large hoard of Silver Eagles and bars, along with all of my gold, and going to Full Faith & Credit in preparation for the black swan’s arrival.

What will it look like? No one knows, as I acknowledged above. But I’m betting that the renowned Sage of Omaha might be the tell. He’s sitting on more than $250 billion in cash, and punting B of A stock like it’s fourth and 20. Additionally, Elon Musk, who by all accounts benefits more than nearly anyone from Government handouts for his space program, has literally bet his freedom on a second Trump term.  During recent campaign appearances, Musk said we are broke and need to reduce fiscal outlays by $2 trillion, or a third. In case you forgot, Musk bought Twitter, fired 90% of the employees, and recently proposed lending his ‘shitcoin’ acronym DOGE to create an accountability division of the Federal government.

Realize that most crashes occur at the start of new presidential administrations.  Before you put me down as a political partisan,  though, let me note that I see almost no difference between Democrats and Republicans — aka donkeys and elephants. They are all feral animals that inhabit the Washington jungle, as far as I’m concerned. Politics aside, I believe this is the perfect opportunity to rebuke the reckless behavior that has powered the bull market since the Covid era.  I hope I’m wrong, at least about the magnitude of the coming bear market, but I am convinced that the sky really is about to fall.

Rick Ackerman November 3rd, 2024

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