Wall Street is off to a rocky start -- except for energy and precious metals, that is.
When oil and gold touch all-time contract highs in the same trading day, you know something is happening. That kind of double whammy has real psychological impact. It wakes people up a little.
And make no mistake -- what’s happening here is the gradual abandonment of the dollar. As the value of the greenback falls, the cost of “stuff” gets more expensive. When investors start feeling edgy about paper money, they tend to crave hard assets… the kind that can’t get bushwhacked by a printing press.
The most recent jolt was blamed on a weak read from the ISM manufacturing survey. The ISM survey, an influential measure of industrial activity, suggests that business activity in the U.S. is slowing down. This is unsettling news when coupled with ugly housing data and spreading problems in the financial sector.
If the U.S. economy goes into a stall, the Federal Reserve will have a very limited range of options. They’ll have to do what they can to keep the party going, and that means opening up the printing presses.
It’s still early innings in the dollar devaluation game. Consider that while gold just touched all-time highs, it’s still nowhere near inflation-adjusted highs. Gold would have to surpass $2,120 -- a 150% increase from here -- to match its inflation-adjusted peak.
Will we see that happen? I’m confident we will. Will we find ways to profit from it? You bet.
Here’s Adam Lass with more insight.
Warm Regards,
JL
