“Mission Accomplished” My Rear End

The Rude Awakening Is Coming [The Daily Reckoning] January 10, 2023 [WEBSITE]( | [UNSUBSCRIBE]( “Mission Accomplished” My Rear End - The bad news behind the good news… - Don’t be fooled by the “soft landing” meme… - Then Jim Rickards shows you why the mainstream arguments against gold are just bogus… [** FUNDING DEADLINE REACHED ** Act Now]( We’ve just hit the funding deadline on a project that’s unlike anything else we’ve ever done in the history of our business. It’s your chance to co-invest alongside some of the best connected people in America. (Hundreds of our readers are already onboard, too.) But we’re at the funding deadline. Which means you’re running out of time to be a part of this. [Click Here To Learn More]( Portsmouth, New Hampshire January 10, 2023 [Jim Rickards] JIM RICKARDS Dear Reader, The year 2023 is off to a good start as far as stock market investors are concerned. For the week of Jan. 3–6, 2023, the Dow Jones and S&P 500 both closed up 1.5%, and the Nasdaq rose 1.1%. Much of those gains occurred on Friday, Jan. 6 when the Dow rose 700 points in a single day (up 2.13%) while the S&P 500 rose 2.28% and Nasdaq rose 2.6%. These gains were mainly attributable to Wednesday’s ADP report, which showed strong job creation, and Friday’s U.S. employment report, which showed that the unemployment rate has dropped to 3.5%, the lowest since 1969. Combined with recent inflation reports that showed inflation coming down quickly, market analysts were quick to claim “Mission Accomplished” for the Federal Reserve. Their view was that the Fed has raised interest rates enough to slow inflation without causing a recession. This was the “soft landing” that many had been hoping for. It was time for the Fed to stop raising rates and let inflation take care of itself, while enjoying the benefits of strong job creation and a low unemployment rate. This prospect of a halt in interest rate hikes was enough to get the stock market to the liftoff stage. Unfortunately for stock investors, the economic news is not nearly as good as the headlines would have you believe. Here's a reality check on Friday's employment report: Job creation is down 33,000 month over month. Real wages are down 2.5% year over year. The average workweek is down 0.2% month over month. So the same employment report that showed 3.5% unemployment also showed that real wages had declined, hours worked had declined and job creation had declined. Unemployment figures are a lagging economic indicator. So the fact that these negatives are now showing up does not preclude the fact that we are already in a recession. Other indicators show that industrial output, services output and housing prices are in decline. World trade is contracting (data on trade surpluses and deficits is less important than data on trade volume, which shows sharp declines). Yield curves are inverted, which means that markets expect interest rates to decline in the near future because of economic contraction, disinflation or both. If I lend you money for 10 years, I want a higher interest rate than if I lend it for two years to compensate me for added risks from the longer maturity such as inflation, policy changes, default and more. When a yield curve is inverted, that means that longer maturities have lower interest rates. That happens, but it’s rare. It means that market participants are expecting economic adversity in the form of recession or liquidity risk. They want to lock in long-term yields even if they’re lower than short-term yields because they expect yields will be even lower in the future. In a nutshell, investors see trouble ahead, at least the smart ones. At the same time, the Fed will continue on its path of rate hikes (partly because of the low unemployment rate), which will only make the recession worse. A new wave of taxes and regulations coming from the Biden administration will slow growth even further. Stocks may continue to rise in the short run based on the soft landing meme. Don’t be fooled. I expect a sharp recession in early 2023 with a potential liquidity crisis coming on top of the recession perhaps in mid-to-late 2023. Stock markets may decline 30% or more. Inflation will turn quickly to disinflation and deflation. Investors should take gains, increase cash allocations and get ready to weather a severe storm. Oh, and make sure you own some gold. Below, I demolish the main arguments mainstream economists make against gold. As you’ll see, none of their arguments holds water. Read on. Regards, Jim Rickards for The Daily Reckoning [feedback@dailyreckoning.com.](mailto:feedback@dailyreckoning.com) P.S. [A new crisis is emerging in America… one that could devastate millions of unprepared Americans in 2023.]( That sounds alarmist, I know, like I’m just trying to scare you. But I’ve studied the issue very deeply and I’m afraid it’s a very real possibility. I’m talking about [the complete and total breakdown of the supply chain.]( I’m sure you think the problems have gotten better, not worse. But there are compelling reasons to believe that the worst really is to come. In the coming months, we could run out of critical supplies, according to several sources… “Farmers predict worse food shortages, higher prices in 2023.” – Fox News… “A crippling shortage of diesel fuel threatens to devastate [the West] in 2023.” – Global Research… “Latest Biden shortage is vital children’s medicine.” – Breitbart… And much more. This is NOT a joke. That’s why I’m urging you to take matters into your own hands today. And yes, you can do that. But you can’t just sit around and hope for the best. Hope is not a strategy. [Click here now to see how to prepare.]( [Urgent Note From Jim Rickards: “You’re Running Out Of Time!”]( [Click here for more...]( Your exclusive “Pro level” upgrade to Strategic Intelligence is ready to be claimed. This is your chance to claim 3 exciting new benefits along with a whole new level of service. Hurry… you only have until the timer hits 0 to act. [Click Here ASAP]( The Daily Reckoning Presents: Demolishing the fake arguments against gold… ****************************** The Bogus Case Against Gold By Jim Rickards [Jim Rickards] JIM RICKARDS Following the Panic of 1907, John Pierpont Morgan was called to testify before Congress in 1912 on the subject of Wall Street manipulations and what was then called the “money trust” or banking monopoly of J. P. Morgan & Co. In the course of his testimony, Morgan made one of the most profound and lasting remarks in the history of finance. In reply to questions from the congressional committee staff attorney, Samuel Untermyer, the following dialogue ensued as recorded in the Congressional Record. Untermyer: I want to ask you a few questions bearing on the subject that you have touched upon this morning, as to the control of money. The control of credit involves a control of money, does it not? Morgan: A control of credit? No. Untermyer: But the basis of banking is credit, is it not? Morgan: Not always. That is an evidence of banking, but it is not the money itself. Money is gold, and nothing else. Still, most mainstream economists dismiss gold. They call it a barbarous relic and say it has no place in today’s monetary system. But today, I want to remind you of the three main arguments mainstream economists make against gold and why they’re dead wrong. The first one you may have heard many times. “Experts” say there’s not enough gold to support a global financial system. Gold can’t support all the world’s paper money, its assets and liabilities, its expanded balance sheets of all the banks and the financial institutions in the world. They say there’s not enough gold to support that money supply. That argument is complete nonsense. It’s true that there’s a limited quantity of gold. But more importantly, there’s always enough gold to support the financial system. The key is to set its price correctly. It is true that at today’s price of about $1,881 an ounce, pegging it to the existing money supply would be highly deflationary. But to avoid that, all we have to do is increase the gold price. In other words, take the amount of existing gold, place it at, say, $14,000 or $15,000 an ounce, and there’s plenty of gold to support the money supply. In other words, a certain amount of gold can always support any amount of money supply if its price is set properly. There can be a debate about the proper gold price, but there’s no real doubt that we have enough gold to support the monetary system. I’ve done that calculation, and it’s fairly simple. It’s not complicated mathematics. The important part to remember is that there’s always enough gold to meet the needs of the financial system. You just need to get the price right. The second argument raised against gold is that it cannot support the growth of world trade and commerce because it doesn’t grow fast enough. The world’s mining output is about 1.6% of total gold stocks (global gold production has actually flatlined at around 3,300 metric tonnes for the past several years). World growth (leaving 2020 out because of COVID) is roughly 3–4% a year. It varies, but let’s assume 3–4%. Critics say if world growth is about 3–4% a year and gold only grows at 1.6%, then gold doesn’t grow fast enough to support world trade. A gold standard therefore gives the system a deflationary bias. But that’s also nonsense, because mining output has nothing to do with the ability of central banks to expand the gold supply. The reason is that official gold, the gold owned by central banks and finance ministries, is over 35,000 tons. Total gold, including privately held gold, is about 180,000 tons. That’s over 145,000 tons of private gold outside the official gold supply. [[CHART] Could Inflation Hit 20%+ In 2023?]( [Click here for more...]( Take a close look at this scary chart pictured here… What you see is the money supply in America… And as you can see, the number of dollars in circulation has exploded in the last few years. In fact, more than 80% of all dollars to ever exist have been printed since just 2020 alone! Which is why some say inflation could soon explode even higher than it is now, to 20% or more. And if you’re at or near retirement age you must take action now to protect yourself… otherwise you risk losing everything. See how to survive America’s deadly inflation crisis. [Click Here To Learn More]( If any central bank wants to expand the money supply, all it has to do is print money and buy some of the private gold. Central banks are not constrained by mining output. They don’t have to wait for the miners to dig up gold if they want to expand the money supply. They simply have to buy some private gold through dealers in the marketplace. To argue that gold supplies don’t grow enough to support trade is an argument that sounds true on a superficial level. But when you analyze it further, you realize that’s nonsense. That’s because the gold supply added by mining is irrelevant since central banks can just buy private gold. The third argument you hear is that gold has no yield. That’s Warren Buffett’s main criticism of gold (even though he’s now invested in a gold stock). It’s true, but gold isn’t supposed to have a yield. Gold is money. And money doesn’t offer a yield. I was on Fox Business with Maria Bartiromo once. We had a discussion in the live interview when the issue came up. I said, “Maria, pull out a dollar bill, hold it up in front of you and look at it. Does it have a yield? No, of course it has no yield, money has no yield.” If you want yield, you have to take risk. You can put your money in the bank and get a little bit of yield — maybe half a percent. Probably not even that. But it’s not money anymore. When you put it in the bank, it’s not money. It’s a bank deposit. That’s an unsecured liability in an occasionally insolvent commercial bank. You can also buy stocks, bonds, real estate and many other things with your money. But when you do, it’s not money anymore. It’s some other asset, and they involve varying degrees of risk. The point simply is that if you want yield, you have to take risk. Physical gold doesn’t offer an official yield, but it doesn’t carry risk. It’s simply a way of preserving wealth. Gold is money. So the three mainstream criticisms of gold don’t hold water once you actually analyze them properly. Why should you own gold now? The two great bull markets were 1971–1980 (gold up 2,200%) and 1999–2011 (gold up 760%). In between these bull markets were the two bear markets (1981–1998 and 2011–2015), but the long-term trend is undeniable. Since 1971, gold is up 5,000% even after the bear market setbacks. Now the third great bull market is underway. It began on Dec. 16, 2015, when gold bottomed at $1,050 per ounce at the end of the 2011–2015 bear market. Since then, gold has nearly doubled. That’s a nice gain, but it’s small change compared with 2,200% and 760% gains in the last two bull markets. When it comes to capital and commodity markets, nothing moves in a straight line, especially gold. But this pattern suggests the biggest gains in gold prices are yet to come. And right now, my models are telling me that gold is poised for historic gains as the third great bull market gains steam. I always say that at least 10% of your investment portfolio should be devoted to physical gold — bars and coins primarily. Then put your feet up and relax. Regards, Jim Rickards for The Daily Reckoning [feedback@dailyreckoning.com.](mailto:feedback@dailyreckoning.com) P.S. [A new crisis is emerging in America… one that could devastate millions of unprepared Americans in 2023.]( That sounds alarmist, I know, like I’m just trying to scare you. But I’ve studied the issue very deeply and I’m afraid it’s a very real possibility. I’m talking about [the complete and total breakdown of the supply chain.]( I’m sure you think the problems have gotten better, not worse. But there are compelling reasons to believe that the worst really is to come. In the coming months, we could run out of critical supplies, according to several sources… “Farmers predict worse food shortages, higher prices in 2023.” – Fox News… “A crippling shortage of diesel fuel threatens to devastate [the West] in 2023.” – Global Research… “Latest Biden shortage is vital children’s medicine.” – Breitbart… And much more. This is NOT a joke. That’s why I’m urging you to take matters into your own hands today. And yes, you can do that. But you can’t just sit around and hope for the best. Hope is not a strategy. [Click here now to see how to prepare.]( Thank you for reading The Daily Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:feedback@dailyreckoning.com) [Brian Maher] [James G. Rickards]( is the editor of Strategic Intelligence. He is an American lawyer, economist, and investment banker with 35 years of experience working in capital markets on Wall Street. He is the author of The New York Times bestsellers Currency Wars and The Death of Money. [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2023 Paradigm Press, LLC. 808 Saint Paul Street, Baltimore MD 21202. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. To end your The Daily Reckoning e-mail subscription and associated external offers sent from The Daily Reckoning, feel free to [click here.]( Please note: the mailbox associated with this email address is not monitored, so do not reply to this message. We welcome comments or suggestions at feedback@dailyreckoning.com. This address is for feedback only. For questions about your account or to speak with customer service, [contact us here]( or call (844)-731-0984. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. 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