Weekly Market Update by Retirement Lifestyle Advocates

What to Make of Stocks Now – Part Two

         Last week, in “Portfolio Watch,” I wrote this:

While stocks are still in an uptrend, there are some signs emerging that may indicate an approaching top in equities.  Keep in mind that what I am sharing with you are current observations; I am not suggesting that a decline in stocks is imminent. However, prudent investors may want to be a bit more defensive in light of what I’m observing here.

         As if on cue, stocks fell hard last week.

         Longer-term, stocks remain in a technical uptrend by my measure; however, stock investors should proceed prudently here.

Metals Continue to Rally as a Fort Knox Audit May Loom

Gold is quickly closing in on $3,000 per ounce, closing last week at $2,951.90.  Silver stands at $32.74 as we begin the new week.

As federal agency audits continue, there is now a call for an audit of Fort Knox, the site that holds a significant amount of US gold holdings.

Senator Rand Paul has formally requested a full audit of Fort Knox. 

Fort Knox is the site of the United States Bullion Depository, which has held the United States’ gold reserves since 1937.  The US Mint states that there are 147.3 million ounces of gold in the vault, which hasn’t been opened since 2017.

President Donald Trump has questioned whether the gold is still there, saying, “If the gold isn’t there, we’re going to be very upset.”

Elon Musk, heading up DOGE, wrote, “Who is confirming that the gold wasn’t stolen from Fort Knox?  Maybe it’s there, maybe it isn’t.”

Senator Paul has requested an in-person visit to Fort Knox sometime prior to March 19.

Fed Chair Powell Wrong on the Economy?  Again?

         Jay Powell, Chair of the Federal Reserve, testified to Congress last week that the US economy was in great shape.  (Source:  https://citizenwatchreport.com/so-no-jay-powell-this-isnt-a-solid-economy-its-a-house-of-cards-built-on-debt-thats-starting-to-collapse/#google_vignette)

         Seems that Mr. Powell may be ignoring some of the debt and economic data that has been deteriorating over the past several years.

         Credit card debt increased by more than $45 billion in the fourth quarter of 2024.  That brings total credit card debt to more than $1.2 trillion.  While that debt level is not indicative of anything, more important is the level of defaults on credit card debt.  In other words, how many credit card users are simply throwing in the towel and not paying their credit cards?

         Delinquency rates on credit card debt tell the real story.  Serious delinquencies on credit cards, defined as cardholders who are more than 90 days late on their payment, are now 11.4%, that’s the highest level in more than 13 years.

         Credit card defaults are now at the same level as during the Great Financial Crisis.  Current delinquency rates are even higher than what the country experienced during the 2001 recession.

         Bottom line:  the deficit spending policies of the federal government and the subsidization of that deficit spending by the Federal Reserve over the past several years have created an inflation level that is making many Americans suffer.

Doug Casey on Where the US Economy Goes From Here

         Echoing what I wrote in my “Economic Consequences” book 13 years ago and again in my “New Retirement Rules” book, initially published 10 years ago, Doug Casey noted that one of two economic outcomes is inevitable.

         Here’s a quote from Casey (Source:  https://internationalman.com/articles/doug-casey-on-the-coming-monetary-reset-and-trumps-impact-on-gold-and-the-dollar/):

“Starting in the 1960s, a growing number of people noticed the size of the debt and annual deficits. Even back then—when numbers were trivial compared to current levels—it was said this can only end up one of two ways: Either runaway inflation, where the dollar loses all value, or catastrophic deflation caused by massive defaults in debt.”

         I have long suggested that due to the easy money policies of the Fed, we would see inflation (which we have) followed by deflation due to debt excesses in both the private sector and on the balance sheet of the federal government.

         While Casey approves of current federal policies to eliminate wasteful spending and fraud, he suggests that there could be some fallout from these policies.

“I thoroughly approve of his massive firings of employees, disbanding agencies, and cutting the budget by hundreds of billions. The risk is that he might bring on a deflationary collapse. Many of the government grifters and their pals, who are getting rich through the likes of USAID, will have to radically reduce their spending. Many could wind up in bankruptcy, defaulting on their mortgages and other debt. That’s how a deflationary credit collapse could start.”

         I believe Casey is spot on. 

         I’d use this analogy to explain the possible deflationary outcome.  If you have a credit card with a very high limit, you can spend and spend and create the illusion of prosperity.  However, at a certain point, the deficit spending will have to stop; the credit card gets maxed and further deficit spending is impossible.  It is at that point that deflation and the pain associated with deflation emerges.

         The deflationary pain will be more bearable if the credit card user voluntarily quits spending money they don’t have.  The problem with voluntary restraint is that the deflationary symptoms emerge sooner, even though they are more bearable.

         This week’s RLA radio program features an interview that I did with Mr. Karl Deninger of Market-Ticker.org.  Karl and I talk about the US economy and also some politics.

         The interview is posted and available now by clicking on the "Podcast" tab at the top of this page.

“I told my doctor I broke my leg in two places.  He told me to quit going to those places.”

                                                      -Henny Youngman