The US Election is not yet “in the books” as we write this issue of “Portfolio Watch”, nor do we expect it to be anytime soon.
Our topic for this week is debt. It's important to measure and monitor the amount of debt that exists in the private sector and compare it to the level of production occurring. It is this trend that impacts the economy more directly than public debt accumulation and money creation.
In this week’s “Portfolio Watch”, we’ll dig into some major and rather rapidly developing stories relating to currencies. These stories have gone largely unnoticed given all the other news stories circulating; however, there are still some true journalists that exist and report on stories that could have a major effect on the lives of everyday Americans.
We’ll begin with our forecast from earlier this year that at least 1/3rd of colleges and universities would close within five years. While COVID has impacted enrollment at institutions of higher learning, problems existed in the higher education world prior to the lockdowns imposed in response to COVID.
In this week’s “Portfolio Watch”, we’ll provide a currency update. Every day that passes we are seeing changes in this area. Given the rest of the news and the tendency of the mainstream media to report with bias, many of these changes have gone largely unreported and consequently unnoticed.
Last week in the markets was the polar opposite of the prior week. All markets, with the exception of the US Dollar and the US Treasury long bond, were higher. JP Morgan Chase agreed to pay $920 million to settle civil and criminal charges after Federal agencies alleged the firm made fake trades in the precious metals markets. And China has declared a policy of reducing her dollar investments in US Treasury bonds and is selling her dollars to buy commodities.
With the exception of the US Dollar Index, all markets were ugly last week. Silver led the way as far as declines went, falling a whopping 14.32%. As we have warned, when markets rise parabolically like silver did, a pullback is highly likely. We are now seeing that pullback.
As longer-term readers of this newsletter know, we have long advocated for a “Two-Bucket Approach to managing assets. Over the past few years, as we have been forecasting the events that are now occurring, other individuals and companies in our industry have begun to promote what they label a two-bucket approach to managing assets.
To a casual observer, the economic news is mixed. Depending on the story one is reading, you would conclude that we are in a severe recession, even a depression or, on the other hand, we are seeing a quick recovery from the economic fallout from the lockdown response to COVID-19.