"We printed too much money and didn't think of unintended consequences," - IMF
Ask for permission - or beg for forgiveness? Global economists chose the ladder when it came to overprinting cash, and now it’s time for them to get down on their knees and begin to beg.
May 2nd, 2022
Source: The United States of America (just kidding we made this up but you catch our drift)
Welcome to this week’s Golddiggers Newsletter, where we dig for the golden stories that are impacting today’s markets.
Let’s dive into this week’s dirt.
For our top story, amongst all the chaos of the past few years, there still seemed to be a steady stream of cash flowing from the government to ensure society didn’t suffer.
And though many enjoyed the comfort of a stimulus cheque or a government subsidy, what was the real cost?
Well, IMF Director Kristalina Georgieva admitted during a recent panel discussion that central banks globally “printed too much money and didn’t think of unintended consequences.”
This “unintended consequence” is actually an inflation explosion that is impacting the cost of pretty much everything.
If you think it’s hard to believe that the top economists in the world managed to overlook the concept of inflation that’s part of the seventh-grade academic curriculum, so do most people.
So, either these top economists are absurdly under-qualified - or they’re peddling some pretty bold lies.
Regardless of what led to this situation, the writing is on the wall, the US is a nation heavily in debt, and this debt increases every second.
Curious about just HOW much debt the US is in? Keep track of it at usdebtclock.org - currently showing that the country as a whole is nearly thirty-point-five trillion dollars in debt, which breaks down to over $90,000 per citizen and nearly $243,000 per taxpayer.
Mining
While debt reaches an all time high, gold prices have plummeted to its lowest point in the past ten weeks, closing today at $1858.57.
Source: GOLD PRICE
What do experts have to say on the topic?
“The bad news is bad news and the good news is bad news,” stated Wells Fargo’s head of real asset strategy John LaForge.
This comical overgeneralization by LaForge sheds light on the poor performance of gold in recent months, which has seen it fall out of favor with many loyal investors who are pursuing other options, such as crypto.
However, LaForge and a handful of other investors stand behind the prediction that gold will close out at $2100 by year's end regardless of its poor early performance.
Crypto
Time will eventually tell if LaForge’s prediction reigns true… but in the meantime, Crypto is proving to attract more than just historically loyal gold investors as pension plans begin to take note.
Fidelity announced last week that they will be the first major retirement plan to allow investors to put bitcoin in their 401k’s.
Dave Gray, head of Fidelity’s workplace retirement offerings, shared “There is a need for a diverse set of products and investment solutions for our investors. We fully expect that cryptocurrency is going to shape the way the future generations think about investing for the near and long term.”
The reality is, pension plans are drastically underperforming, and many believe bitcoin might be the solution to allow them to keep up with inflation.
Commodities
If all the above seems like bad news - afraid to say this next update isn’t much better. Renewable diesel, the long time golden child of fuels for the North American trucking industry, is earning itself a bit of a reputation with experts unveiling what’s behind its “clean” image.
That’s because more and more farm land is being dedicated towards growing soybeans which supplies the vegetable oil necessary for the formula of renewable diesel.
This has the potential to create a fuel or famine situation in the future, all in the name of “green energy”
Tech
Now, can we really wrap up our top stories to start off your week without providing an update on what the world’s most eccentric billionaire is up to?
Well - we probably could - but not this week.
The Washing Post shared just yesterday that there is “flawed math behind Elon Musk’s Twitter deal.”
Without getting too specific, Musk’s plans to finance his Twitter acquisition is reliant on Tesla stock staying around $1000 per share. If it falls below $750 (which isn’t too far off from where it currently sits at $870), Musk would not possess the leverage ratio he needs to complete the Twitter deal. If shares fall below $400…. Well, shit - meet fan.
Between Musk’s erratic behaviour and the Johnny Depp & Amber Heard trial, we have much entertainment to distract us from the crippling inflation that is hurdling our way!
So here’s our recap:
The United States of America “accidentally” spent too much money
Gold prices are down - but expected to go up by years end
Bitcoin might be the hail Mary for pension plans
Renewable diesel isn’t that renewable as it gobbles up farm land
Tesla’s stock will predict the future of Elon’s big purchase
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That’s it for now - stay golden.
The opinions shared in this newsletters are not intended to serve as investment advice, and are not to be used as the basis for any sound investment, these are the opinions of the individuals mentioned in this newsletter.